In yet another class action stemming from the Financial Services Royal Commission, Maurice Blackburn Lawyers have filed a class action against Colonial First State over its transitioning of members to MySuper products.
It is alleged that super fund trustee duties were breached, causing “substantial losses to over 100,000 members over several years”.
Maurice Blackburn announced that it had filed a class action in the Federal Court against Colonial First State Investments Limited – the trustee of the Colonial First State FirstChoice Superannuation Trust – and Linda Elkins, CFS’s former executive director.
“The class action alleges contraventions of superannuation law in Colonial’s slow implementation of the MySuper reforms for members of the FirstChoice Employer Super division, in particular that Colonial breached its duties to super members.”
It is alleged that CFS failed to exercise the “care, skill and diligence” of a “prudent” super fund trustee, to act in the best interest of members, or give priority to the interest of members when there was a conflict of interest.
The case will centre on CFS’s “failure” to transition $3.2 billion of superannuation to MySuper products in a “timely way and in the best interests of superannuation fund members”.
“The contraventions at the heart of this case resulted in members in FirstChoice Employer Super paying higher fees and receiving a lower investment return for an extended period of time, when they could have been in Colonial’s cheaper, better-performing MySuper product earlier,” said Miranda Nagy, Principal Lawyer with Maurice Blackburn.
“MySuper was introduced to protect the retirement outcomes of Australians by ensuring that consumers weren’t losing money on unnecessary fees and products, and Colonial had a legal obligation over and above a basic moral obligation to move default member balances into MySuper at the time that best met their members’ needs, not their own.”
In 2016 Industry Super Australia accused retail super funds of “gouging” fees from members by slowly moving them to MySuper products. In late 2017 ASIC was reportedly investigating if super funds were transitioning members to MySuper at the last minute. The transition to MySuper was a subject of inquiry in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
This is not the first class action stemming from the Royal Commission. Law firm Slater and Gordon have so far filed three class actions as part of its ‘Get Your Super Back’ campaign – against two Westpac subsidiaries, Colonial First State, and AMP. The Slater and Gordon class action against Colonial First State relates to its cash investment option.