ASIC has announced that it is taking action against Colonial First State Investments Ltd (CFSIL), both in its own capacity and as trustee for Colonial First State FirstChoice Superannuation Trust (FirstChoice Fund).
It comes after a class action was filed on behalf of super fund members by Shine Lawyers against Colonial First State earlier this year for erosion of accounts by excessive insurance premiums.
The new proceedings centre around alleged breaches of both the ASIC Act and the Corporations Act and relate to allegations of misleading or deceptive communications with FirstChoice Fund members.
Having commenced the Federal Court proceedings, ASIC is alleging that between March 2014 and August 2016, CFSIL communicated with members of the FirstChoice Fund in a misleading or deceptive manner around the provision of investment directions to stay within CFSIL’s FirstChoice Fund rather than transition to MySuper.
Since the Australian government passed amendments to the Superannuation Industry (Supervision) Act 1993 (Cth) in 2012, trustees – including CFSIL – have been required to offer members default “MySuper” superannuation products.
ASIC has outlined that its case focuses on template letters sent to members, and 46 phone calls based off scripts.
The corporate regulator is also alleging that Colonial First State did not provide a “general advice warning” during phone calls, in breach of the Corporations Act.
“It is notable that a total of 8,605 members provided an investment direction keeping them in their existing product.”
ASIC is arguing that Colonial First State also breached its obligations to members by not ensuring it was doing all things necessary to ensure that the financial services covered by its licence were provided efficiently, honestly and fairly.
According to ASIC, the proceedings will be listed for a first case management conference on a date yet to be fixed with the regulator seeking declarations of breaches and the imposition of civil penalties inclusive of a monetary figure.
The Commonwealth Bank of Australia has acknowledged the civil penalty claim against CFSIL.
CFSIL has outlined that it is currently reviewing ASIC's claim and will provide any update as required.
