Hundreds of Australians have filed a class action against Colonial First State Investments because they claim the insurance premiums they had to pay were too high.
The law firm acting on behalf of the customers, Shine Lawyers, alleged that the Commonwealth Bank of Australia (CBA) superannuation subsidiary “tipped its members into overpriced policies with the bank’s insurance arm CommInsure”.
Class actions practice leader Rebecca Jancauskas said this was not in the clients’ best interests, as very similar or even better policies were available with cheaper premiums from other providers.
“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,” she 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.”
Referencing the Royal Commission report, Jancauskas claimed the firms put their own self-interest and profits ahead of their customers.
“Commissioner Hayne has said vertically integrated companies that include both super funds and insurers will need to justify decisions to default members into their own life policies,” she added.
The class action is being paid for by Woodsford Litigation Funding; and its chief investment officer, Charlie Morris, said this was the only way to “deliver justice”.
He added: “Many customers may have lost a few thousand dollars, which would not ordinarily be enough to warrant launching individual court actions.
“Class actions like this one, backed by litigation funding, ensure that justice is accessible and affordable to everyone, and Woodsford is pleased to play its part in helping these individuals to achieve the redress they deserve.”
The lawsuit was filed in the federal court in Victoria and encompasses members of four different superannuation funds who had life and/or total and permanent disability insurance between January 2014 and 2020.
The funds are:
- FirstChoice Personal Super and Pension;
- FirstChoice Wholesale Personal Super and Pension;
- FirstChoice Employer Super; and
- Commonwealth Essential Super
CBA has acknowledged the class action against its subsidiaries and said it is reviewing the claim and will provide “any updates as required”.