Retirement
CBA fails Aussies with super switching miscarriage, misleading language
Retirement
CBA fails Aussies with super switching miscarriage, misleading language
Thousands of Colonial First State customers were left in higher-cost funds, rather than shifted into lower-cost accounts as mandated by law, the royal commission has heard.
CBA fails Aussies with super switching miscarriage, misleading language
Thousands of Colonial First State customers were left in higher-cost funds, rather than shifted into lower-cost accounts as mandated by law, the royal commission has heard.
The 15,000 customers who had not chosen a fund were to be moved into basic MySuper accounts by 1 January 2014, however, as the commission heard, this did not eventuate.
The executive general manager of Commonwealth Bank-owned Colonial First State, Linda Elkins, said the decision came down to “operational risk”. Senior counsel Michael Hodge described it as an “offence”, while Ms Elkins preferred the term “error”.
However, the commission also heard that upon failed super-switch, Colonial First State began a campaign encouraging customers to remain in its fund to retain revenue.
Customers were told, “if this transfer proceeds, your ongoing fees and costs may increase”, and prompted to make an investment decision to remain in the fund.
Another flyer told customers they would pay transfer costs and the new insurance cover may not be suitable.
“Can I suggest this letter is obviously drafted in a way to make the member concerned and apprehensive about their [account] being transitioned over to MySuper?” Mr Hodge asked.
“I agree that this letter is not balanced.”
It was the preferred refrain for Ms Elkins, who also agreed a call-out script that told savers they needed to confirm the investment decisions they made or would like to make, was “not correct”. There was no such requirement.
She went on to say the script “should have been more balanced in the way it described [a requirement for an investment decision].”
However, Mr Hodge shot back, “When you say ‘more balanced’, do you mean not misleading?”
It was the first day of pain for Colonial First State, with Ms Elkins taking more questions this morning on its insurance premiums and the charging of fees to dead customers.
Follow along here.
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