The federal court has declared Colonial First State as liable in a series of charges relating to “false or misleading” representations made to members with regards to their superannuation account, according to the corporate regulator.
According to a court declaration released Wednesday CFS made misleading representations to members of its FirstChoice fund “on at least 12,798 occasions” that may have encouraged members to stick with the fund rathe than move to a cheaper MySuper product.
“The misleading or deceptive conduct by Colonial included telling its members that recent legislative changes required Colonial to contact them and obtain an investment direction to stay in the FirstChoice Fund when that was not the case,” ASIC stated.
“Colonial also failed to tell members that if Colonial did not receive an investment direction from the member, it was required to transfer the member’s superannuation contributions into a MySuper product.”
In a series of transgressions that occurred between March 2014 and July 2016, Colonial also failed to provide a general advice warning to 17 clients and “failed to do all things necessary to ensure the financial services covered by its financial services licence were provided efficiently, honestly and fairly,” ASIC added.
According to ASIC deputy chair Sarah Court, Colonial’s actions did not put members’ interests first.
“Superannuation fund members need to receive clear and accurate information to make informed decisions,” Court stated. “ASIC alleged Colonial made misleading representations which may have impacted members’ decisions about where to keep their funds and may have resulted in members’ funds being kept in higher fee-paying super products that included commissions.”
A penalty hearing for CFS has been scheduled for October 12 this year.
The news caps a tough week for CFS after its FirstChoice fund failed APRA’s first annual performance test. Of the 13 funds that failed, FirstChoice was the second largest by member cohort with 231,401 members, behind only BT’s MySuper fund with 546,432.