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Class actions launched against Colonial First State Investments, Avanteos Investments, and Commonwealth Bank over alleged super fund gouging have settled for $249 million, pending court approval.
Settlement achieved by Slater and Gordon on behalf of super fund members of Colonial First State Investments Limited (CFSIL), Avanteos Investments Limited (AIL), and the Commonwealth Bank of Australia (CBA) is the largest for the firm in a group proceeding.
It is subject to final documentation and Federal Court approval.
It was alleged that between November 2008 and September 2021, retirement savings were reduced through the payment of low interest rates on certain cash and deposit investments through Colonial First Investments superannuation and wrap products: CFS FirstChoice and FirstWrap and Commonwealth Essential Super.
CFSIL and AIL allegedly received undisclosed payments from CBA to incentivise them to invest members’ savings at lower rates.
These cash and deposit investments did not provide members with the returns they were reasonably entitled to expect, and it resulted in them losing millions in aggregate retirement funding, it was alleged.
“This is a great outcome for the many thousands of customers who put their faith in Colonial and Avanteos to look after their financial interests but were alleged to be disadvantaged by the arrangements in place with CBA,” Slater and Gordon’s class actions practice group leader, Nathan Rapoport, said in a statement.
“The outcome reflects the seriousness of the allegations, the long period of the alleged wrongdoing and the vast sums of members’ savings invested by the CFS trustee with CBA.”
Rapoport said that if trustees do not fight for the best interest rate returns on cash and deposit investments, “members can lose tens of thousands of dollars by the time they retire”.
He added that small differences can add up in superannuation.
“A few hundred dollars today, invested in many years in super, can compound into a much larger amount by the time people retire.
“This settlement will boost many members’ retirement savings so it can grow into the future,” Rapoport said.
