The Australian Securities and Investments Commission (Asic) has issued a civil penalty claim against Colonial First State Investments (CFSI), part of the Commonwealth Bank of Australia (CBA).
The regulator alleges that the investment firm provided misleading or deceptive communication to clients of its FirstChoice Superannuation Trust.
In 2012, the government amended legislation to require trustees to provide a default superannuation product.
“MySuper accounts were to offer members a new, simple and cost-effective super account with lower fees, simple features and a single diversified investment option or a lifecycle investment option,” Asic said.
Evidence of wrongdoings
But, according to the watchdog, between March 2014 and August 2016 “CFSI communicated with members of the FirstChoice Fund in a misleading or deceptive manner regarding the provision of investment directions to stay within CFSI’s FirstChoice Fund rather than transitioning to CFSIL’s MySuper product”.
To support its claims, the regulator provided template letters sent to members, as well as made 46 phone calls “in accordance to scripts”.
Over 8,600 members were affected by this.
According to Asic, the evidence it brought proves breaches of CFSIL’s obligations:
- to do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly; and
- as a financial service licensee to comply with financial services laws.
“The amount of any penalty will be determined by the court and each party will be making their own submissions to the court on the penalty range should Asic be successful in the proceeding”, the regulator added.
Preparing its case
The CBA confirmed that it received the watchdog’s filing and that will provide an update in due course.
“CBA has been informed by CFSI that a civil penalty claim has been brought by the Asic against CFSI, a wholly owned subsidiary of CBA” the bank said.
“The claim alleges certain contraventions of the Asic Act and the Corporations Act.
“CFSI is currently reviewing Asic’s claim and CFSI will provide any update as required.”