Class Action against AMP and Commonwealth Bank
The Royal Commission (RC) has provided yet another public service for Australians who have superannuation.
Slater and Gordon (SGH.ASX) announced a potential class action again two of Australia’s largest superannuation providers; AMP (AMP.ASX) and Commonwealth Bank (CBA.ASX).
This class action could be the start of many. The Class Slater and Gordon have announced is looking to have $500m that was unfairly deducted from their clients’ (member’s) superannuation accounts, repaid to members.
Since the RC started, many financial advisers who do not work for one of the Big Four Banks or AMP, have reported a massive increase in new customers flocking to them to check whether they too have been ripped off.
What Happened?
Both AMP and CBA managed superannuation for their clients (members).
Part of managing the superannuation was selecting which investments to invest in. At times the investments would be in cash accounts or in other investments similar to term deposits.
The issue stems from AMP and CBA keeping most of the interest earned on the member’s cash investments.
How did this happen?
AMP and CBA choose where the money is invested.
The CBA superannuation chose to invest the money in their own parent bank’s accounts/products, but paid much lower rates than the competitive market, or even the Reserve Bank of Australia (RBA).
AMP chose to ‘invest’ the money into investments which lost money. In other words, AMP’s members would have been better off having that money under their mattresses.
Why did this Happen?
AMP an CBA are businesses, companies listed on the ASX.
Both companies are run to generate profits for their shareholders (not customers, clients or members).
Most investors would note that CBA is Australia’s largest company and has reported consecutive record profits for years.
These profits had to come from somewhere, and it is clear that some of those profits came from CBA choosing what could be called ‘poor investments’ for their members, with the intention of providing better returns for their shareholders.
This is what the Royal Commission (and everyone else for that matter) calls 'conflict of interest'. That AMP and CBA were in a position to choose do they:
Act in the best interest of their clients (members/customers) and get them the best return possible on their superannuation; or
Increase returns for their shareholders
As the Royal Commission has shown, AMP, CBA and most of the other large banks, have chosen to increase shareholder returns at the expense of their customers/clients/members.
Have I been ripped off too?
Sadly, the answer is ‘yes’ for most Australians with superannuation.
As the Royal Commission (RC) has turned the spotlight on these despicable actions, most Australians are wondering how their own superannuation has been impacted.
The RC findings show that a lot of Australians whose superannuation is invested with AMP, ANZ, CBA (Colonial), Westpac (BT, Asguard etc), National Australia Bank (MLC, Navigator, NULIS, Apogee, Godfrey Pembroke etc.) have been charged inappropriate fees, received poor returns or little to no advice for the fees paid.
What can I do about it?
If you actually know who your adviser is, being the person you’re paying fees to, then pick up the phone and call your adviser.
If you don’t know who your adviser is, then try starting with the help desk to get answers to your questions.
What if I want someone else’s opinion?
You can ask a different financial adviser their opinion.
Some advisers will charge you, others can provide a no-charge 30 minute consultation.
For a free phone consultation book a call from an experienced adviser here.
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