The Slater & Gordon Limited (ASX: SGH) share price has been a big mover on Tuesday after announcing a new campaign.
In early afternoon trade the law firm's shares are up a sizeable 14% to $2.80.
What is the new campaign?
This morning the law firm announced the launch of its Get Your Super Back campaign.
The campaign will see Slater and Gordon attempt to bring big bank-owned super funds to account, alleging that the funds owe Australians more than one billion dollars.
While the law firm has indicated that the campaign will result in a series of legal actions, the first on its hit list appears to be superannuation funds owned by Commonwealth Bank of Australia (ASX: CBA) and AMP Limited (ASX: AMP). These are Commonwealth Bank's Colonial First State and AMP Super.
Slater and Gordon is alleging that big bank-backed super funds failed to obtain competitive cash interest rates on cash option funds for members and charged exorbitant fees.
It estimates that millions of members who held part or all of their superannuation in bank owned funds have been impacted. This could be upwards of one-third of the adult population according to the release.
Slater and Gordon advised that the allegations arose from evidence to the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Head of Class Actions Ben Hardwick stated that: "…millions of Australians may be out of pocket and a handful of banks have lined their pockets. Slater and Gordon doesn't think that's fair and we are saying, enough is enough."
He added that: "What funds like Colonial First State have been doing is dumping super with a parent bank such as CBA. The interest from the parent bank is so low that investors in the cash option are receiving rates as low as 1.25% a year. This is even below the RBA cash rate."
AMP was even worse, with the Royal Commission revealing that some of its "super fund members were getting negative returns on the cash held for them by AMP."
What now?
The market doesn't appear concerned by the legal action. Commonwealth Bank's shares are up 1.7% today and AMP's shares have edged 0.2% higher.
While a class action could do some damage to the banks, I wouldn't expect it to have a huge impact on their businesses. As such, I continue to believe that the majority of the banks are good value options for investors right now.
However, I wouldn't be in a rush to buy AMP shares just yet. I fear the Royal Commission may have damaged its brand significantly and it could take several years for a full recovery.
