Kirsten Morrison

Colonial First State will pay a $100 million in-principle settlement in relation to the grandfathered commissions class action brought by plaintiff law firm Slater & Gordon.

The matter relates to CFS’ payment of commissions to advisers and the fees charged to Colonial First State FirstChoice Superannuation Trust members from 1 July 2013 to 1 June 2020 which was identified during the Hayne Royal Commission in 2018. That evidence led to the class action firm pursuing litigation.

A spokesperson for CFS, which is owned by private equity giant KKR with a minority stake held by the Commonwealth Bank, declined to comment beyond a statement on the company’s website.

“Following a confidential court-ordered mediation on 16 June 2023, CFSIL and the applicants have agreed to settle the class action. The settlement is subject to court approval,” the statement said.

“In agreeing to resolve the litigation, [CFS] continues to deny the allegations and makes no admissions of liability or wrongdoing.”

It is understood a communication regarding the settlement was sent to CFS staff and external financial advisers on Friday morning. Industry sources said the wealth giant was positioning the matter as the end of the post-Hayne chapter for the company, which has ambitions to grow its wealth platform and retail super products.

If the court green-lights the settlement, eligible group members will each recover a share of the agreed settlement sum minus legal fees and court-approved deductions.

‘I never sought, nor received, any financial advice’

Slater & Gordon issued a statement on Friday noting the outcome is the highest achieved by the firm in a group proceeding.

The outcome was welcomed by lead applicant Marcel Krieger, who joined FirstChoice Personal Super in 2010 during a branch visit to the Commonwealth Bank.

After stepping into the branch, he noted the adviser mentioned the commission would be received for signing up.

“I didn’t realise I would be paying ongoing higher fees to fund ongoing commission payments,” he said.

“After that initial meeting, I never sought, nor received, any financial advice in relation to my super.”

He added that prior to the class action he didn’t know that from mid-2013 he was paying higher fees than members who joined the same product after that time.