Law firm Slater and Gordon is launching what could become Australia’s largest ever class action after inviting millions of Australians to claw back fees from retail super funds.
Slater and Gordon said Tuesday its “Get Your Super Back” class action will be launched in light of evidence that Australians may have been charged excessive fees and subjected to uncompetitive cash interest rates.
“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,” the firm said in a statement.
“The firm will allege the big bank-backed super funds failed to obtain for members 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.”
At a press conference on Tuesday 11 September, Slater and Gordon head of class actions Ben Hardwick said the campaign will involve a series of class actions.
Mr Hardwick said the first action will be taken against either Commonwealth retail superannuation fund, Colonial First State, or AMP super.
Colonial First State admitted during the royal commission hearings to breaking the law 15,000 times with relation to superannuation fees by keeping clients in high-fee accounts despite a legal requirement to shift them to lower fee products.
Colonial First state was also grilled for continuing to charge super fund members for financial advice after those members had died, though the business has subsequently promised to refund these fees.
Similarly, AMP was taken to task after the commission heard some of its super members were receiving a negative return on their cash investment options, which Mr Hardwick said “requires the fund to do basically nothing” despite charging fees.
“We think retail fund members should be compensated for the difference between their returns on cash and the returns they should have received if the trustee had done their job properly,” Mr Hardwick said.
“When you entrust someone to manage your super, to manage the last 20 or 30 years of your life, so to speak, you expect that job to be in the hands of someone you can trust, someone you can rely upon. Some of the bank-owned super funds have broken this trust.”
While the scope of the class action is yet to be determined, official data shows there are some 28.6 million superannuation accounts held Australians, more than 12.3 million of which are retail funds.
As many as five million people are expected join the action the litigation, making it biggest class action in Australian history.
It would easily dwarf the 10,000 litigants who joined the Black Saturday bushfire lawsuit and the more than 150,000 people who have signed up to the ongoing class action against bank fees, News Corp reported.
Mr Hardwick said the combined value of claims against Colonial First State and AMP alone could come to more than half a billion dollars, and the average retail fund member could expect to make claims “in the thousands” for the losses they’ve incurred.
“There may be examples where there are small claims, but we all understand and know that when you owe the bank money, whether it’s $30 or $800, the bank will come after you, and we think it’s fair and reasonable for members of a superannuation fund to go after the bank,” Mr Hardwick said.
However, both the Commonwealth Bank and AMP have said they are yet to be served with legal proceedings.
AMP added that it is already taking steps to fix the situation for affected members.
“As we set out in our submissions to the Royal Commission, we are already fixing these issues and remediating customers,” the business said.
“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.”
The New Daily also understands that the Financial Services Council, a lobby group and policy body representing retail super funds, life insurers, and financial advice groups, is waiting until after the royal commission’s public hearings have ended before issuing its policy positions on the matter.
The New Daily is owned by Industry Super Holdings.