How to get your $2000 back
COMMBANK and its Colonial First State superannuation fund have been hit with a potential $100 million class action alleging members were ripped-off with uncompetitive interest rates on their cash holdings.
Slater and Gordon filed the suit in the Federal Court this week on behalf of lead plaintiff Keith Kayler-Thomson and "thousands" of other Colonial First State members.
It's the first of a wave of class actions expected to be filed against the major bank and their super funds in the law firm's "Get Your Super Back" campaign, which could see up to five million Australians refunded.
"Colonial and CBA have been paying interest rates to members of Colonial's superannuation funds which are uncompetitive," Slater and Gordon head of class actions Ben Hardwick said.
The suit alleges First State failed to obtain the most competitive interest rate for members invested in cash-only investment options and balanced options with a cash component.
CommBank was paying Colonial members rates as low as 1.25 per cent, below even the official Reserve Bank cash rate of 1.5 per cent.
Had CommBank paid an extra 50 basis points to a member with $100,000 in cash, that would work out to an additional $2235 over five years.
"The allegation is that Colonial as a trustee is obliged to act in the best interests of its members by working to get the best possible interest rate, not just the one that was on offer from its parent bank, and that in failing to get the most competitive interest rate the losers were members of the super fund," Mr Hardwick said.
Other super funds including AMP, which was forced to admit during the banking royal commission that some of its super fund members were seeing negative returns on their cash investments, will be next.
"This is the first in a series of class actions," Mr Hardwick said, adding "thousands" of people had so far signed up to the Get Your Super Back website. "We expect most of the major retail banks to face class actions arising out of their breaches of the law in the management of people's superannuation."
Mr Kayler-Thomson was not made available for interview, but said in a statement through Slater and Gordon that he could not believe how blatant the unethical behaviour appeared to be.
"These are my retirement savings we're talking about," he said. "I assumed that a big institution like Colonial could be trusted to act ethically and within the law.
"I'm angry. You can bet that if I owed Colonial or the Commonwealth Bank money they wouldn't hesitate to force me to pay it back and they should do the same. I'd bet thousands of other Colonial members will feel exactly the same way."
The case is being backed by global litigation funder Augusta Ventures Limited.
Current and former members of FirstChoice Personal Super, FirstChoice Pension, FirstChoice Wholesale Personal Super, FirstChoice Wholesale Pension, and FirstChoice Employer Super who are or were invested in the FirstRate Saver investment option, may be eligible to participate in the class action.
Current and former members of Commonwealth Essential Super, who are or were invested in the Cash Deposit, Balanced and Lifestage investment options, may also be eligible to take part.
CommBank has been contacted for comment.