Super fund members alleged that Colonial failed to transfer $3.2 billion of accrued funds to a MySuper product in a timely manner.
Maurice Blackburn Lawyers has announced that it has reached a $56.3 million settlement with Colonial First State on behalf of 100,000 super fund members.
A class action filed by the law firm in October 2019 had alleged that Colonial contravened super law through its slow implementation of MySuper reforms for members of the FirstChoice Employer Super division.
This allegedly left these members in high-fee accounts with lower investment returns and also saw them bear the cost of commissions to financial planners.
The class action claimed that Colonial failed to transfer $3.2 billion of accrued default amounts over to a lower cost and higher-performing MySuper product in a timely manner.
Furthermore, Colonial allegedly breached its duties to super members by failing to exercise the degree of care, skill and diligence required of a prudent superannuation trustee, perform its duties and exercise its power in the best interest of beneficiaries, and give priority to the interests of beneficiaries where a conflict of interest arose.
“As the High Court has recognised, superannuation is often the greatest asset Australians have. It is deferred pay and it is critical to a dignified retirement,” said Maurice Blackburn principal lawyer Miranda Nagy.
“Fund members are entitled to expect that superannuation trustees put their interests first.”
Maurice Blackburn also noted that this is the first settlement of a super class action since the Financial Services Royal Commission.
A trial had been scheduled to start next week but has now been vacated.
The $56.3 million settlement is inclusive of legal fees and remains subject to court approval, and Colonial did not admit wrongdoing in the case.
“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,” said Ms Nagy.
Class action members should begin receiving compensation proceeds into their super accounts this year.
Jon Bragg is a journalist for Momentum Media's Investor Daily, nestegg and ifa. He enjoys writing about a wide variety of financial topics and issues and exploring the many implications they have on all aspects of life.
Diverger has made an offer to acquire Centrepoint Alliance, a move that would create one of the largest licensees behind only Insignia and AMP.
The corporate regulator has outlined a key focus on product labelling and advertising.
The federal government has sought to clear up uncertainty about the status of crypto for tax purposes following the adoption of bitcoin as legal tende...
Get the latest news! Subscribe to the ifa bulletin
Get notifications in real time and stay up to date with content that matters to you.