More than 500,000 Australians could share a proposed A$249 million settlement after a class action alleged that superannuation trustees invested members’ retirement savings with Commonwealth Bank at interest rates below those available elsewhere.
The agreement involving Colonial First State Investments Limited (CFSIL), Avanteos Investments Limited (AIL) and Commonwealth Bank of Australia was reached without an admission of liability. It remains subject to approval by the Federal Court of Australia. ([businessnewsaustralia.com](https://www.businessnewsaustralia.com/articles/slater-and-gordon-secures-249m-settlement-against-colonial-first-state-and-cba-over-low-super-interest-rates.html))
The proceedings alleged that the trustees failed to act in members’ best interests by placing cash and deposits with their parent bank without properly seeking the most competitive rates. They also alleged that undisclosed payments from CBA encouraged the arrangements, while members received lower returns on their savings.
The claims relate to investments offered through Colonial First State’s FirstChoice products, Commonwealth Essential Super and Avanteos-backed wrap products, including FirstWrap. The alleged conduct is said to have occurred between November 2008 and September 2021. ([slatergordon.com.au](https://www.slatergordon.com.au/class-actions/current-class-actions/colonial-first-state-class-action))
Slater and Gordon, which brought the action, said the settlement was the largest it had secured in a group proceeding. The firm said the scale of the payout reflected the length of time covered by the allegations and the substantial sums invested through the affected funds.
Nathan Rapoport, the firm’s class actions practice group leader, said the case highlighted the potential impact of small differences in interest rates when retirement savings were invested over many years.
“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 said.
Lead applicant Wendy Gibson, who joined Colonial’s FirstChoice Wholesale Personal Super in 2005 and invested in term deposits through the product between 2011 and 2019, said she was relieved the case was nearing its conclusion.
“I was dumbfounded when I first learnt of Colonial’s alleged conduct,” Ms Gibson said. “I’m glad that we persevered with this case and I’m relieved that it will finally conclude.”
Commonwealth Bank, CFSIL and AIL continue to deny the allegations and have made no admission of liability or wrongdoing. CBA said the proposed settlement was covered by a provision previously recognised in its financial accounts. ([businessnewsaustralia.com](https://www.businessnewsaustralia.com/articles/slater-and-gordon-secures-249m-settlement-against-colonial-first-state-and-cba-over-low-super-interest-rates.html))
Eligible group members will not receive payments unless the Federal Court approves the agreement. If approved, the money will be distributed under a court-approved scheme, with individual entitlements calculated according to members’ particular circumstances.
The final amount received by each person will also depend on any deductions approved by the court, including legal costs, funding expenses and the cost of administering the distribution. Slater and Gordon said most eligible members would not need to take further action, although the process of calculating and making payments was expected to take time. ([fedcourt.gov.au](https://www.fedcourt.gov.au/__data/assets/pdf_file/0006/582972/VID28of2020-Notice-A-Settlement-Notice.pdf))
