Retirement
Colonial First State misled thousands of customers
Colonial First State has been found guilty of making false or misleading representations and engaging in misleading and deceptive conduct when communicating with members.
Colonial First State misled thousands of customers
Colonial First State has been found guilty of making false or misleading representations and engaging in misleading and deceptive conduct when communicating with members.
The Federal Court has declared Colonial First State Investments, as trustee for the Colonial First State FirstChoice Superannuation Trust, liable for misleading superannuation members regarding investment directions on at least 12,978 occasions.
According to the corporate regulator, ASIC, the misleading representations may have encouraged members to stay with the FirstChoice Fund rather than move to the MySuper product - designed to offer members a cost-effective super product with lower fees and straightforward features.
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.
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.
“Superannuation fund members need to receive clear and accurate information to make informed decisions," said ASIC deputy chair Sarah Court.
“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. These actions did not put members’ interests first,” Ms Court noted.
Overall, the court found that Colonial, between 18 March 2014 and 21 July 2016, engaged in misleading and deceptive conduct by sending 12,911 letters to members containing misleading representations about investment directions; made false or misleading representations and engaged in misleading and deceptive conduct in 70 calls to members; failed to provide a “general advice warning” in 17 calls to members; and failed to do all things necessary to ensure the financial services covered by its licence were provided efficiently, honestly and fairly.
A penalty hearing has been listed for 12 October 2021.
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