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More than 330,000 account holders at National Australia Bank (ASX: NAB) will be represented in a class action lawsuit against the banking giant, alleging customers were paying more than they should have in fees.
The class action, filed in the Victorian Supreme Court by law firm Maurice Blackburn this morning, has been launched on behalf of 330,000 MasterKey Business Super and Personal Super account holders.
The allegations against two NAB group entities, MLC Nominees and NULIS Nominees, centre around breaches of super trustee duties which Maurice Blackburn says caused substantial losses to members.
MLC Nominees was the trustee of The Universal Super Scheme, which in July 2016, merged with others to become the MLC Super Fund, of which NULIS was trustee.
Maurice Blackburn alleges contraventions of superannuation law, including that the two defendants left default members idling with products with higher fees and paying commissions to financial advisers that were banned in the low-cost MySuper product.
Maurice Blackburn national head of Class Actions Andrew Watson says NAB failed to transition in excess of $6.3 billion of accrued default amounts over to the lower-cost MySuper product in a timely way.
"The contraventions at the heart of this case resulted in NAB's default MasterKey super members paying higher fees and commissions and receiving lower investment returns for periods of time, when they could have been in a cheaper, better overall MySuper product," says Watson.
"This is another regrettable case of mismanagement in the superannuation sector. The whole point of the MySuper reforms was to make sure that millions of everyday Australians who hadn't made an active decision about their super were not losing money on higher fees and unnecessary or unused services.
"MySuper was introduced to protect the retirement outcomes of Australians. MLC Nominees and NULIS's job was to move default member balances into MySuper at the time that best met their members' needs, not the needs of NAB or financial advisers."
The class action follows the Australian Securities and Investment Commission's (ASIC) decision to take NAB to court over alleged fees for no service conduct, uncovered initially during the Royal Commission into the banking and finance sector.
ASIC has cited thousands of instances of the bank allegedly breaching the law - including misleading and unconscionable conduct, meaning it potentially faces billions of dollars in fines.
NAB has already began to remediate customers for the allegations detailed by ASIC to the tune of $37.8 million to 27,500 financial planning customers so far.
The bank says that from February 2019 it began switching off fees for all clients with ongoing fee arrangements and determined to refund all ongoing fees paid by clients after 31 May 2019 until the client entered into a new advice arrangement.
The bank announced in November that its executive bonuses would be cut following poor performance in FY19 and the damage the fees for no service scandal has had on its reputation.
Shares in NAB are down 0.12 per cent to $25.67 per share at 12.01pm AEDT.
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