The class action lawsuit, which Shine had launched in January 2020, relates to group insurance policies held by some FirstChoice and Essential Super members during the period 22 January 2014 to 15 February 2022.
On 22 October 2021, AIA Australia Limited (AIAA) was joined as an additional respondent to the proceedings because AIAA acquired ownership of CommInsure’s life insurance business on 1 April 2021.
Shine alleged that Colonial First State Investments Limited had overcharged members for their life insurance policies (death, total and permanent disability, and income protection cover) held inside their CFSIL superannuation fund.
On Wednesday, Shine announced that it has reached an in-principle settlement agreement with CFSIL, Colonial Mutual Life Assurance Society Pty Limited and AIA Australia Limited for $140 million, inclusive of costs, expenses and any applicable taxes.
The settlement is without admission of liability, is subject to the approval of the Federal Court of Australia, and a formal settlement deed is being negotiated by the parties.
In a statement, a CFS spokesperson said that in agreeing to resolve the litigation, all parties “continue to deny the allegations and make no admissions of liability or wrongdoing”.
“If the Court approves the settlement sum of $140 million, eligible group members will be entitled to recover a share of the settlement sum, after accounting for any deductions which may be approved by the Court, such as legal fees charged by the Applicants’ lawyers and any amounts to be paid to the funder of the class action,” the spokesperson said.
“As the matter remains before the Court, CFS is not in a position to provide further comment at this time.”
Additionally, under the arrangement with CBA, the bank will be responsible for paying the agreed settlement, according to the spokesperson.
“On 1 December 2021, CBA completed the sale of a 55 per cent interest in CFSIL to KKR. On 15 March 2021, the Federal Court approved a scheme which provided that AIAA was liable for certain liabilities of CMLA as specified in the scheme. CBA assumed carriage of the class action on CFSIL’s and CMLA’s behalf,” they added.
In July 2023, CFS reached a $100 million settlement over a class action that Slater and Gordon brought on behalf of 500,000 Australians who were charged excessive superannuation fees to fund ongoing commissions paid by Colonial First State to financial advisers.
The fees were charged to members of the Colonial First State FirstChoice Superannuation Trust in the period 1 July 2013 to 1 June 2020.
“Following a confidential court-ordered mediation on 16 June 2023, CFSIL and the applicants have agreed to settle the class action. The settlement is subject to court approval,” Colonial First State said in a statement at the time.
“In agreeing to resolve the litigation, CFSIL continues to deny the allegations and makes no admissions of liability or wrongdoing.”
The Slater and Gordon class action alleged that Colonial, a subsidiary of the CBA, did not act in the best interests of thousands of customers by continuing to charge existing members high fees under the commission arrangements. This is despite legislation being introduced that banned the charging of commissions on new super accounts from 2013 onwards.
The law firm further alleged that Colonial had the power at the time to reduce the fees or transfer existing members to identical products with lower fees and where commissions were not paid, but this did not happen until 2019 and 2020.
