This is the fourth class action launched as part of Slater and Gordon’s Get Your Super Back campaign, and the second against Colonial First State, a subsidiary of Commonwealth Bank.
The class action alleges that since 2013 Colonial failed to act in the best interests of its members and acted unconscionably by charging them higher fees to pay for ongoing commissions to financial advisers who were not required to provide any ongoing services to members.
The class action relates to members of the FirstChoice Super fund.
The banking royal commission revealed that since 2013, Colonial paid financial advisers or the licensees they worked for over $400 million in commissions that were funded by charging higher fees to superannuation members. Many of the advisers worked for the Commonwealth Bank group, which made significant profits from retaining these commissions.
Slater and Gordon special counsel Nathan Rapoport said in 2013 the Australian government banned commissions to financial advisers for new members because it was clear they were not in members’ best interests, through its Future of Financial Advice reforms.
“Ever since, Colonial continued to pay commissions with respect to existing members under what became known as the ‘grandfathering exception’, and because of this it continued charging those members higher fees,” Mr Rapoport said.
“The Hayne report found there was no justification for continuing to pay commissions to financial advisers. We agree. Paying these commissions – and as a result charging members higher fees – ripped hundreds of millions of dollars out of members’ retirement savings to profit the financial advisers or the licensees they worked for who were not required to provide any services in exchange.
“We allege that Colonial should have stopped paying the commissions for all its members and reduced their fees accordingly, as it properly did for new members.
“At the royal commission, Colonial accepted that some of its conduct fell below community standards and expectations. This is an understatement. We believe Colonial’s conduct was in breach of the law and it should be held to account and required to compensate its members.”
Mr Rapoport said Colonial had the power to transfer existing FirstChoice Super members into identical products with lower fees and where commissions were not paid.
“Rather than use this power for the benefit of its members, Colonial kept them in the more expensive products, preying on their passivity so it could continue to charge them higher fees to fund the commissions,” he said.
The class action is being funded by litigation funder, Augusta Ventures.
From the Maurice Blackburn website:
“On 17 September 2019, Maurice Blackburn commenced proceedings on behalf of shareholders in [b]Slater & Gordon[/b][b][/b] against Arnold Bloch Leibler (ABL), the law firm that acted as legal due diligence advisers to Slater & Gordon (ASX:SGH) in relation to the Entitlement Offer that was used to raise capital from SGH shareholders to finance the disastrous acquisition of the Professional Services Division (PSD) of Quindell plc, a UK-based legal services company.”
It’s all a bit incestuous isn’t it…
When will they start chasing their own Maurice Blackburn have no shame in charging one of my clients $8000.00 just to fill in a TPD claim form and send it off to the super fund and even then they got it wrong!
I find it fascinating when Slater and Gordon get involved. They have destroyed 99.7% of shareholder equity in the value of their own shares. In this case they are targeting a perfectly legal contractual arrangement. Nobody said that they’re smart.
Absolute ambulance chasers… And we’re the rotten profession…
So, what Slater and Gordon are stating is that despite the law, CFS should have transferred members accounts from an employer fund where the individual member was receiving significant fee rebates based on the total volume of the employer plan thereby significantly reducing their account fees to an alternative super account that did not participate in any of the employer plan fee rebate program and to then pay an adviser service fee to gain access to advice simply because the employer fund was paying a grandfathered commission payment approved by legislation.
And it is not just the employer plan fee rebate received in one year, but every single year the member was to remain in that particular fund adding up to significant offsets in costs to the member over the life of their account.
The level of misunderstanding and opportunism is staggering.
The worst example of misinformed attack to date.
CFS must fight this to the bitter end because a precedent set on this retrospective basis and against the law that existed and still exists to date is simply incredulous and beyond acceptance.
Why don’t they just put Slater and Gordon in liquidation and out of its misery once and for all?
This is a desperate and unconscionable play from a desperate and unconscionable firm.
When the Financial Services industry and advisers are being accused of not being professional, it beggars belief how the legal fraternity must view the actions and practices of firms such as these and the reputational damage they cause.
The ethics and morals of these operators are in the gutter and they appear to be able to be allowed to create an environment to suit their agenda.
Their so called ” No Win No Pay ” model is simply just a hook to engage.
Their sole intention of course is a big pay day for the firm and the scum that is the litigation funders.
To attempt to create a case inferring that although the law was correctly followed in relation to the payment but the payment was in fact in breach of the law is ludicrous and shows the level of desperation and opportunity Slater and Gordon and Nathan Rapoport are prepared to consider for their own financial gain.
In fact Nathan Rapoport wasn’t even practicing when Bill Shorten took legal advice from the Aust Govt Solicitor to make it LAW that commissions for pre-FOFA clients would be allowed to continue due to contractual rights and he had only been practicing for 12 months when FOFA commenced.
Opportunistic and a disgrace to their own profession.
you know what they say advisers… You gotta do some work to earn some dough.. AKA can’t sit on ya blerter and get money for nothin’
Logically it would now appear that Colonial should support the ARC High Court Challenge fund and prove once and for all that these grand fathered commissions are property rights!!!
Advisers need at least one WIN, aren’t we all tired of getting kicked by ASIC and the rest. Donate now here
https://arcfund.com.au/
Slater and gordon aka the land of the human centipede.
And now the parasites enter the fray. The parasites will feed on any winnings and distribute crumbs to the supposed victims they claim to represent.
As a lawyer once said to me…we know little about numbers, just the law…
Morons! Whether you believe in commissions going or staying, the fact is the law (FOFA) grandfathered these benefits and even to this day, still affords that grandfathering under LAW until 1 January 2021. Slater and Gordon are drawing a long bow, presumably to try and drum up publicity to gain other class actions to keep them in business given they are close to financial collapse!
So if Colonial are successful in defending this case, on the premise that it was a contractual arrangement, and considered property under Australian Property rights, does this open up a challenge to the gov’ts ban on grandfathered commissions?
I have no time for Slater and Gordon and their ilk but …………
This why grandfathered commissions had to be banned. The whole concept of fees and commission was always murky. The manufacturers always built commission into their products because without commissions advisers wouldn’t sell the product – OK that matured over time as more advisers adopted fee for service but the mud was still stuck under the shoes and out of sight until the RC come along.
The fact that commission was inbuilt was always questionable. The manufacturers were wrong for allowing it but in the race to the bottom they all did. But equally advisers were wrong if they accepted any commission if they weren’t providing any service. And just to be clear saying “I’ll always be here if you need me” without active service is hardly justification for taking an on-going commission.
All the stuff that is going on at the moment is just an uncomfortable speedhump but it needed to be there. The industry and the advisers will be far better valued by the public in the future, be seen as a real profession and the true professionals in our business will flourish.
This industry needs to grow a pair but alas, our associations are once again silent. Just got my renewal notice to. May as well set this on fire as I will not be paying this. Thanks FPA/AFA for letting us down. Can we get those salaries back from our membership fees that we had paid you all these years…..Maybe we should ask Sludge and Grime about that one!!!![/quote]
thank you for not renewing. yay. i got one person with balls. it only takes a few thousand more to make them take notice one at a time. when you get your renewal notice throw it away and keep the cash and buy a nice pair of loafers
Slater and Gordon are nothing but ambulance chasers. And filthy greedy ones at that.
It’s never going to be a fair situation when advisers and product providers are in the position of dealing with the ‘now’ and ‘into the future’ scenario whereas parasite legal firms like this are always looking backwards with the benefit of hindsight. Everyone’s a genius with that.
To explain – advisers (who seem to now be expected to work for nothing despite rapidly eroding remuneration sources, ever increasing business expenses and exhorbitant compliance requirements) might do 99 things right for their clients when mapping out strategies and providing advice yet legal firms like this can come in and say “Yeah, but you ‘should have’ done the 100th thing for your client instead.” or “You could have done it this way…'”
I mentioned this earlier this year after a face to face confrontation with a Hall & Wilcox Sydney lawyer who arrogantly and smugly told me that “We’re coming after you lot!” These leeches see all the legislative changes this industry has experienced the last 4-5 years as a simple meal ticket. That’s all this is IMO.
Wow, looking forward to becoming a profession like the legal profession.
Does Slater and Gordon clearly understand the basis of the FOFA legislation and why commissions were quarantined from the legislation after Bill Shorten receiving legal advice from the Australian Govt Solicitor ????
It was because the advisers had a contractual right to receive these payments and still do !
Slater and Gordon are nothing more than the prostitutes of the legal profession.
This is nonsense. The premise that Sludge and Grime talk about in their class action is pure stupidity. These are contractual in nature and found to be within the boundaries of law. It was fine with regulators at the time. The thought that this is now banned, comes in from 1 January 2021. This ought be thrown out as a farce. If this gets through, then lets then pack our bags as products sold on the basis of trail is to be retrospectively got at. This industry needs to grow a pair but alas, our associations are once again silent. Just got my renewal notice to. May as well set this on fire as I will not be paying this. Thanks FPA/AFA for letting us down. Can we get those salaries back from our membership fees that we had paid you all these years…..Maybe we should ask Sludge and Grime about that one!!!!
Would anyone expect anything less from Slater and Gordon? Is Julia Gillard still on their payroll?
They were grandfathered you idiots, many had exit fees that created a barrier to yanking them out, many also have grandfathered conditions with Centrelink as well, also most of these was put on the books, pre fees even being the norm, hence why many of these old products including MLCs flagship Materkey range you cannot even deduct a service fee, thbe actuaries who make these products did not even provision for fee in the fund construction, many other providers exactly the same, and dont forget also the exit fees on most of these, who are these idiots saying the clients were never serviced, what crap that is, services exactly the same now as on fees, no difference whatsoever..
“The class action alleges that since 2013 Colonial failed to act in the best interests of its members and acted unconscionably by charging them higher fees to pay for ongoing commissions to financial advisers who were not required to provide any ongoing services to members.” How is this conduct any different to what the useless politicians in this country get paid for when they make up all the rules for other people (where those rules don’t apply to them).
Retrospective prosecution. Next all advisers that ever received a trail commission will be taken to court. When does this nonsense stop? I have never seen anyone prosecuted for not adhering to community standards. What are those community standards by the way?
Irrespective of what Slater and Gordon believe,m the fund had a contractual agreement with the advisers to pay said commissions. i reckon I can see a second class action here if they are switched off!