Shine Lawyers has filed a class action against Colonial First State Investments, claiming hundreds of thousands of its fund members have seen their superannuation eroded by excessive insurance premiums.
The legal firm has alleged Colonial First State Investments Limited (CFSIL) did not act in the best interests of its members when taking out group insurance policies with parent company (CBA)-owned CommInsure.
The claim filed in the Victorian Federal Court on Wednesday has said that despite there being evidence of equivalent or better policies available through other insurers for cheaper premiums, CFSIL chose a CBA-owned provider, resulting in super members paying higher premiums than necessary between January 2014 and January 2020.
Members said to have been affected were with funds FirstChoice Personal Super and Pension; FirstChoice WholeSale Personal Super and Pension; FirstChoice Employer Super and Commonwealth Essential Super.
They had life and or TPD insurance issued through CommInsure through their super.
Shine has estimated the number of impacted customers to have been more than 700,000.
Shine class actions practice leader Rebecca Jancauskas commented as subsidiaries of CBA, CFSIL and CommInsure were motivated by self-interest, saying they had a “mutually beneficial arrangement that had the effect of putting profits ahead of people.”
“These customers were forced to pay more for life insurance as well as total and permanent disability insurance, and this has eaten into their superannuation,” Ms Jancauskas said.
“Many of these people are approaching retirement and now their nest egg has shrunk as a result of the conduct of Colonial First State Investments.”
Shine client and former CFS customer David Stuart said he had spent hundreds of dollars on his insurance policy, but he didn’t see any money when making a claim.
“It has taken valuable dollars out of my superannuation when I am already doing it tough,” Mr Stuart said.
“It doesn’t belong with the banks.”
The claim has come after Slater and Gordon Lawyers launched a class action against Colonial First State in October, calling out a number of the same super funds for charging 500,000 members excessive fees for financial adviser commissions.
Slater and Gordon also has another separate class action against CFS, claiming a number of the CBA-owned funds boosted their revenue by investing members’ savings with CBA, despite there being escalated interest rates on cash investments.
Around the same time, Maurice Blackburn filed a class action against the company on behalf of MySuper account holders, alleging that Colonial breached legal requirements to implement MySuper reforms.
For the newest claim, Shine Lawyers has invited affected members to register for the class action through its website.
The team taking on the case includes Shine class actions practice leaders Vicky Antzoulatos and Ms Jancauskas, as well as associate Alissa McKillop.
Woodsford Litigation Funding is funding the action.
Investor Daily has contacted CBA for comment, but is yet to hear a response.
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].