ASIC takes CBA and Colonial First State to Court over payment of banned conflicted remuneration
The regulator alleges that more than $22 million in conflicted remuneration was paid by Colonial First State to CBA for the distribution of a superannuation product.
The Australian Securities & Investments Commission (ASIC) today announces that it has launched civil penalty proceedings in the Federal Court of Australia against Commonwealth Bank of Australia (CBA) and CBA’s subsidiary, Colonial First State Investments Limited (CFSIL). The case stems from alleged conflicted remuneration paid by CFSIL to CBA between July 1, 2013 and June 30, 2019.
ASIC alleges that more than $22 million in conflicted remuneration was paid by CFSIL to CBA for the distribution of Essential Super, a superannuation product issued by CFSIL. CBA distributed the Essential Super product using its branch and digital channels. About 390,000 individuals became members of the Commonwealth Essential Super fund under the arrangements.
According to the regulator, the arrangements between CBA and CFSIL breached the ban on conflicted remuneration under ss963E and 963K of the Corporations Act 2001 because the arrangements could reasonably be expected to influence the choice of financial product recommended by CBA to retail clients; or the financial product advice given by CBA to retail clients.
In these legal proceedings, ASIC is seeking civil penalties against both CBA and CFSIL in relation to the alleged misconduct. Each contravention attracts a maximum civil penalty of up to $1 million for each of CBA and CFSIL.
The first case management hearing is yet to be listed by the Court.
