A class action lawsuit filed against the National Australia Bank group alleges that its subsidiaries MLC Nominees and NULIS Nominees mismanaged pension assets for its beneficiaries. The lawsuit is on behalf of more than 330,000 MasterKey Business Super and Personal Super account holders and claims the bank’s two trustees breached their duties and caused substantial losses to members.
Lawyers for the plaintiffs allege contraventions of superannuation law by MLC Nominees and NULIS. They contend the two firms left MasterKey Business Super and Personal Super default members in products with unnecessarily high fees and paying commissions to financial advisers that were banned in the low-cost MySuper product.
MLC Nominees was the trustee of The Universal Super Scheme (TUSS), which in July 2016 merged with others to become the MLC Super Fund, of which NULIS is the trustee. Originally, MLC MasterKey Business Super and MLC MasterKey Personal Super were products within TUSS. Following the transfer, the members of TUSS became members of the MLC Super Fund, with the trustee of the MLC Super Fund being NULIS Nominees (Australia) Limited.
The suit alleges that MLC Nominees and NULIS failed to exercise the degree of care, skill and diligence required of a prudent superannuation trustee. They are also accused of failing to perform their duties and to exercise their powers in the best interest of beneficiaries. It also alleges that the trustees did not give priority to the interests of beneficiaries where a conflict of interest arose.
Andrew Watson of plaintiffs’ law firm Maurice Blackburn said the case will center on NAB’s failure to transfer more than A$6.3 billion of accrued default amounts (ADAs) over to the lower-cost MySuper product in a timely way, and in the best interests of superannuation fund members.
“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,” Watson said in a statement.
“This is another regrettable case of mismanagement in the superannuation sector,” Watson added. “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.”
During a two-year government inquiry into the country’s banking, superannuation, and financial services industry that was concluded last February, the NAB was accused of multiple breaches of superannuation laws. Inquiry Commissioner Kenneth Hayne referred its conduct in relation to the transfer to MySuper to APRA for consideration of possible criminal or civil proceedings.
Hayne, a former justice of the High Court of Australia, said that NAB acknowledged that one of the consequences of the delay of the transfer was that members paid higher fees for longer than they would have had the ADAs been transferred earlier.
“Advisers, including advisers within the NAB Group, stood to benefit from this to the financial detriment of those members,” Hayne said. “Taken as a whole, the evidence shows that NAB and NULIS (and before NULIS, MLC Nominees) did not move with all deliberate speed to affect the transfers. I consider that they did not do that for fear of how advisers would react to the loss of commissions that would follow from the transfer.”