OnePath Custodians, ANZ and Zurich Australia have agreed to settle a fees-for-no-service class action lawsuit for $50 million, closing another chapter on misconduct uncovered during the Hayne royal commission.
OnePath, now owned by Insignia Financial, will pay $22 million while former owner ANZ will contribute $14 million, but is still subject to court approval.
Announced to the ASX on Friday morning, Insignia said the settlement will be included in 1H25 reporting and excluded from underlying net profit after tax.
Despite the large settlement, there will be no admission from any company of liability or wrongdoing.
The settlement is the third secured by Slater and Gordon’s so-called ‘get your super back’ campaign, which was launched in response to the damning Hayne royal commission which put institutional financial service companies on notice for overcharging clients while providing no service.
The class action was the fifth launched from this campaign and was filed on behalf of members of the former OnePath Master Fund and Retirement Portfolio Service.
It alleged OnePath allowed the charging of excessive fees that had no additional benefit for members to pay unnecessary commissions to financial advisers.
Slater and Gordon practice group leader Kirsten Morrison said in a media release on Friday the law firm was pleased with the outcome.
“It also demonstrates the importance of the class action regime, which has enabled two lead applicants to represent thousands of other group members who otherwise may not have known about these issues,” Morrison said.
“This settlement further strengthens the momentum of the get your super back campaign and reflects Slater and Gordon’s commitment to protecting the interests of millions of superannuation members across Australia.”
Insignia, then still IOOF, had announced in October 2017 its intention to acquire OnePath along with aligned dealer groups including RI Advice and Millenium3 from ANZ, with the OnePath deal being finalised in February 2020.
But OnePath’s model fell under the spotlight of the royal commission and in August 2018, ANZ announced it would no longer retain grandfathered commissions for OnePath investment and superannuation platforms, and that clients would receive the amount of the commission as a rebate.
The class action also alleged that OnePath breached its duties by investing members’ superannuation funds in cash investment options with its parent company ANZ. OnePath deposited these funds with ANZ despite it having low interest rates, hence resulting in inadequate returns.
According to Slater and Gordon, the settlement entitles many members with OnePath or ANZ superannuation or pension accounts to compensation, which will be paid to group members who register with the firm.
The settlement also marks the second set of remediation new CEO Scott Hartley has had to earmark in respect to OnePath, after $23 million was provisioned for an enforceable undertaking by APRA in its FY24 results.
OnePath was also taken to court by ASIC and fined $5 million almost a year ago for misleading conduct.
Between December 2015 and November 2021, ASIC found the superannuation trustee was found to have made misleading representations about its right to continue charging fees and failed to provide services honestly and fairly due to its misleading conduct.
During this period, OnePath issued statements containing false or misleading representations to approximately 15,962 members.
Slater and Gordan secured another class action settlement over a year ago against Colonial First State for $100 million in a similar class action over fees for no service misconduct off the back of the royal commission.