CBA’s former wealth arm settles class action for $100m

afr.com:

Colonial First State will pay $100 million into thousands of superannuation accounts to settle aclass action alleging it illegally charged members high fees to help finance generous commissions for financial advisers.

The settlement, which came with no admission of liability or wrongdoing by CFS, will be the highest payout received by plaintiff law firm Slater and Gordon in a class action, if is it approved by a court.

Colonial First State denies the allegations and makes “no admissions” of liability despite the payout. Ken Irwin

The action, which alleged CFS pulled hundreds of millions of dollars from members’ retirement savings top pay grandfathered commissions, is the latest in a slew of cases linked to the banking royal commission to finally resolve. The commission handed down its final report in 2019.

The suit alleged CFS, the Commonwealth Bank’s former wealth management arm, “unconscionably” increased “excessive” fees charged to existing members of its FirstChoice superannuation fund to fund the advisers’ commissions, including some who were linked to other bank subsidiaries.

This allegedly took place from 2013-2020, despite the government banning funds from charging commissions on new superannuation accounts.

Slater and Gordon said that CFS kept charging these fees despite having the power to reduce them or transfer those members onto identical products with lower fees and no commissions attached. New members to the fund were put on these cheaper products.

The law firm claimed that while advisers, the licensees they worked for and the Commonwealth Bank profited from the retention of these conflicted payments, super fund members were worse off. While CBA has since sold a controlling stake in CFS to KKR, it owned