Shine Lawyers today filed a class action against Colonial First State alleging that hundreds of thousands of Australians were charged excessive insurance premiums.
The action alleges CFS, as Commonwealth Bank's superannuation provider, put members into policies with CommInsure and that the fees charged in these CommInsure policies were not in the best interests of members, and that similar policies with cheaper premiums were available through 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," Shine class actions practice leader Rebecca 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 Limited."
Shine client and former CFS customer David Stuart said: "I spent hundreds of dollars on my insurance policy. I haven't seen any money from that insurance when I tried to make a claim."
"It has taken valuable dollars out of my superannuation when I am already doing it tough.
"In a class action, we all have a chance at having the money we paid, back in our pockets. It doesn't belong with the banks."
Jancauskas said CFS and CommInsure were motivated by self-interest, accusing the CBA subsidiaries of vertical integration.
"This appears to have been a mutually beneficial arrangement that had the effect of putting profits ahead of people," she said.
Woodsford Litigation Funding is funding the class action.
It relates to FirstChoice Personal Super and Pension, FirstChoice Wholesale Personal Super and Pension, FirstChoice Employer Super and Commonwealth Essential Super.
To join the class action, consumers must have held life of total and permanent disability insurance with CommonInsure through these funds between 2014 and 2020.
CBA acknowledged the filing of the class action in an ASX announcement.
CommInsure was sold to AIA Australia, with the sale finalised in November 2019.
"CBA and CFSIL are reviewing the claim and will provide any update as required," CBA said.