SYDNEY (Reuters) - Law firm Slater & Gordon Ltd has filed a class-action suit against Commonwealth Bank of Australia seeking damages of more than A$100 million ($71 million) after the bank allegedly invested the retirement savings of thousands of customers into low, uncompetitive interest-returning products.
The lawsuit is the seventh against a major financial firm stemming from the Royal Commission misconduct inquiry, that released a scathing interim report into its findings last month.
Slater & Gordon lawyers filed the action in the Federal Court on Tuesday night, the company said in an emailed statement.
The firm had previously flagged it would launch a series of class actions against the country’s largest banks and wealth manager AMP Ltd for giving customers “ludicrously low” or negative returns without justification.
The Commonwealth Bank (CBA) said in a statement that it will vigorously defend the proceedings.
The suit will allege CBA’s pension arm, Colonial First State, invested the retirement savings of its members with CBA where it received uncompetitive bank interest rates.
Slater and Gordon head of class actions Ben Hardwick said Colonial was obligated to act in the best interests of its members, not its parent company, by finding the best products for them.
“This class action will allege Colonial First State placed the interests of its members beneath the interests of the Commonwealth Bank.”
Australia’s financial institutions are being forced to put aside substantial sums of money to fight lawsuits, settle customer complaints, and prepare for regulatory changes expected to flow out of the Royal Commission, which will deliver its final report in February.
Australia’s top financial firms have had nearly A$40 billion wiped off their collective market value this year, as the inquiry unearthed systemic malpractice including alleged fraud, bribery, regulator deception, fee gouging and illegal telephone marketing.
During public hearings, CBA admitted it sold insurance to tens of thousands of customers who were not eligible to claim against it, charged customers for services-not-rendered, took fees out of dead client accounts and double-charged interest to thousands of customers due to a coding error.[KCN1MI2A4]
Revelations out of the inquiry earlier this year triggered five shareholder class actions against the country’s largest listed wealth manager, AMP Ltd, for allegedly failing to disclose governance problems.
Lawyers have also sued National Australia Bank and its pension unit on behalf of customers who were allegedly sold worthless insurance policies for their credit cards.
Reporting by Paulina Duran in SYDNEY; Editing by Jonathan Barrett and Richard Pullin