Colonial First State hit with class action for charging ‘excessive insurance premiums’
CBA’s superannuation provider, Colonial First State (CFS), is facing a class action brought by Shine Lawyers on behalf of hundreds of thousands of Australians alleging that CFS tipped its members into policies with the bank’s insurance arm CommInsure.
The class action, filed in the Federal Court in Victoria earlier Wednesday, was brought by Shine Lawyers, representing “hundreds of thousands of Australians who were slugged with excessive insurance premiums”, the firm said in a statement.
The action is being funded by Woodsford Litigation Funding.
According to the firm’s class actions practice leader Rebecca Jancauskas, actions taken by CFS to “tip” its members into policies with the bank’s insurance arm, CommInsure, was not in their best interests as substantially similar or better policies with cheaper premiums were available through other providers.
“These customers were forced to pay more for life insurance as well as total and permanent disability insurance, and this has eaten into their superannuation,” she said.
“Many of these people are approaching retirement and now their nest egg has shrunk as a result of the conduct of Colonial First State Investments Limited.”
Shine client and former CFS customer David Stuart added: "I spent hundreds of dollars on my insurance policy. I haven’t seen any money from that insurance when I tried to make a claim.”
“It has taken valuable dollars out of my superannuation when I am already doing it tough. In a class action, we all have a chance at having the money we paid, back in our pockets. It doesn’t belong with the banks.”
Ms Jancauskas submitted that Colonial First State Investments Limited and CommInsure were “motivated by self-interest” as subsidiaries of CBA.
“This appears to have been a mutually beneficial arrangement that had the effect of putting profits ahead of people,” she said.
The group life insurance industry had been put on notice by the financial services royal commission, Ms Jancauskas continued, which recommended greater oversight of the market.
“Commissioner [Kenneth] Hayne has said vertically integrated companies that include both super funds and insurers will need to justify decisions to default members into their own life policies,” she said.
Woodsford Litigation Funding CIO (Asia Pacific) Charlie Morris said that, in this case, a class action was the best way to deliver justice for those overcharged for insurance.
“Many customers may have lost a few thousand dollars, which would not ordinarily be enough to warrant launching individual court actions,” he argued.
“Class actions like this one ensure justice is accessible and affordable to everyone.”