Bank-owned super funds now face class actions alleging gouging of member accounts

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  • Slater and Gordon is organising a series of class actions against bank-owned super funds for gouging member accounts.
  • The law firm alleges the funds failed to obtain competitive cash interest rates and charged exorbitant fees.
  • The actions follow evidence to the financial services royal commission.

Slater and Gordon is today launching a class action campaign against bank-owned super funds, alleging they have diminished the accounts of members by charging high fees and charging for advice not given.

“Slater and Gordon will take on the banks on behalf of millions of Australians whose retirement savings may have been gouged by bank-owned super funds lining their pockets,” says the law firm.

The Get Your Super Back campaign will be a series of class actions with Commonwealth Bank-owned superannuation fund, Colonial First State, and AMP super likely to be the first targets.

The firm will allege the bank-backed super funds failed to obtain competitive cash interest rates on cash option funds, and charged exorbitant fees, affecting millions of members who held part or all of their superannuation in bank owned funds.

The allegations arise from evidence to the financial services royal commission which has been marked by a conflict of interest between the interests of fund members and the expectation of shareholders for profits.

The royal commission is worried super boards are being left “alone in the dark with our money“.

Michael Hodge, senior counsel assisting the commission, told a hearing that the conduct of super fund trustees isn’t currently covered by the two key regulators, ASIC and APRA.

This left superannuation fund members to “peer dimly through the darkness” and wondering what was happening with their money.

“Trustees are surrounded by temptation — to preference the interests of their sponsoring organisations, to act in the interests of other parts of their corporate group, to choose profit over the interests of members, to establish structures that consign to others the responsibility for the fund and thereby relieve the trustee of visibility of anything that might be troubling,” Hodge said.

Among the banks, the NAB faces legal action over the fee-for-no-service scandal where it charged its super fund members for advice they didn’t get.

The bank is accused of failing to act in the best interests of members and is alleged to have wrongly charged up to $100 million for advice not given.

Corporate regulator ASIC last week launched civil action in the Federal Court against two entities in NAB’s wealth management division, NULIS Nominees (Australia) Limited and MLC Nominees Pty Ltd.

And Australia’s prudential regulator, APRA, is investigating misconduct by some superannuation funds based on details uncovered during hearings at the financial services royal commission.

In the frame is the Commonwealth Bank’s Colonial First State which charged dead people fees for financial advice and failed to move members into a low fee MySuper fund.

The bank has rejected suggestions its actions may be criminal breaches of the Superannuation Industry Supervision Act (SIS) and the Corporations Act.

AMP says it has not been served with proceedings.

“We understand the proposed Slater and Gordon class action may be related to issues in our superannuation business that we previously identified and reported to the regulator,” AMP says.

“As we set out in our submissions to the Royal Commission, we are already fixing these issues and remediating customers.

“We have reduced the administration fees on some of our cash investment options to address the issue of negative returns in the small number of funds impacted by this issue. We are also compensating affected customers for lost earnings.”