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Why CBA was just served with a class action

James Mickleboro
Law

The Commonwealth Bank of Australia (ASX: CBA) share price is trading higher on Thursday despite being the latest bank to be served with a class action.

At the time of writing the banking giant’s shares are up 0.1% to $84.56.

What is the class action?

This morning Shine Corporate Ltd (ASX: SHJ) filed a class action against Commonwealth Bank subsidiary Colonial First State Investments (CFSIL).

The law firm alleges that CFSIL tipped its superannuation members into the bank’s insurance arm CommInsure, which then charged excessive insurance premiums. It alleges that this eroded away retirement savings in fees and was therefore not in their customers’ best interests.

This was despite there being evidence of equivalent or substantially better policies available through other insurers for cheaper premiums.

Shine Lawyers’ Class Actions Practice Leader Rebecca Jancauskas said: “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.”

“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.”

The banking giant responded to the news this morning. In a brief statement, it advised that “CBA and CFSIL are reviewing the claim and will provide any update as required.”

NAB class action.

This is the second class action to be served to one of the big four banks this week.

On Wednesday Maurice Blackburn announced that it has filed a class action against two National Australia Bank Ltd (ASX: NAB) subsidiaries.

This class action alleges that NAB’s MLC Nominees and NULIS Nominees breached their duties in the management of superannuation assets and failed to act in the beneficiaries’ best interests.

The class action alleges that MLC Nominees and NULIS Nominees left clients idling in products with higher fees and commissions that are outlawed in the low cost default MySuper product. This meant they received a lower investment return for an extended period of time.

The post Why CBA was just served with a class action appeared first on Motley Fool Australia.

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Motley Fool contributor James Mickleboro has no position in any of the stocks mentioned. The Motley Fool Australia owns shares of National Australia Bank Limited. We Fools may not all hold the same opinions, but we all believe that considering a diverse range of insights makes us better investors. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Scott Phillips.

The Motley Fool's purpose is to help the world invest, better. Click here now for your free subscription to Take Stock, The Motley Fool's free investing newsletter. Packed with stock ideas and investing advice, it is essential reading for anyone looking to build and grow their wealth in the years ahead. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson. 2020