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.
Why is it that Hesta can advertise their fund only costs $1.50 per week to run? How many people have been mislead and deceived into placing funds into poor performing low cost industry super funds.
yes, at last. its not only this – avanteos investments which is white label for CFS, also owned by KKR, as i understand it, have been making their own rules up for many years…it’s worst than this., corporate crooks.
Does anyone know, much will my ASIC levy rise because of this?
For the next 2 years, possibly $0, except ASIC will likely mess with the AFSL fee? Thereafter…who knows?
Can we make a claim once they have had their penalty?
And from a personal experience, my super is with Colonial FS in an older product with higher fees. Why haven’t I moved it? The funds I am invested in are not available on the cheaper product. My current fund after fees, 32.94% last twelve months. I’ll pay the extra fees!
If you were being honest you would compare it over 5-10 years against the benchmark index.
If you have a diversified portfolio of funds how can you compare it to one index? So if I have 12 funds I need to compare every one to its home index? Maybe compare it to the balanced or growth fund themselves but even then its probably not the same asset allocation anyway. A portfolio is also less costly than a rolled up balanced or growth fund, often by half a percent or more.
Not Really, you could always compare it to several index. For example if you have 12 funds, you should know the percentage of International, Aust, Property, etc……..really not that hard if you try.
5-10 years are phenomenal. Blows benchmark out of the water!
And yet you didn’t want to show us by how much and what the asset allocation was…….
OK…so ASIC will cancel their AFSL…in the same way they remove AR status from an Adviser and ban them?
Wouldn’t that be novel?
AGREE
And yet they’re allowed to continue operating, while an Adviser with perhaps only one count of similar wrongdoing would lose their career. Disgusting.
Does ASIC understand that Apples and Oranges are not same , forgetting the fund it appears that ASIC sole purpose is to focus on fees and has no idea to be able to compare apples with apples or oranges to oranges. To compare funds it would need to work out performance on identical investments percentages. Comparing a balanced fund with say 80 % growth to another with 60 % growth is an easy mathematical equation viz 60% performance should be roughly be 3/4 of the performance of 80 %fund if all is known about the growth funds – which with Union funds is not always transparent
Oh joy!
the new First Choice Index Fund, at 0.20% + 0.14% inv fee = 0.34% pa total is one of the cheapest ($50,000 fund value) super products in the market now. Leaves most of the Industry Funds (with their minimum dollar admin fees) for dead.
Yes but its net returns after the deduction of fees are terrible. Focus on this not fees. I am yet to come across an industry fund that hasn’t out performed the Colonial MySuper funds. Let me know if you have found one..
Colonial MySuper products are their Lifestage options within Employer super, not the FirstChoice Index Fund mentioned above.
This is not a MySuper fund. And yes, many Industry funds have underperformed the CFS MySuper. It is a Lifestage fund so it all depends on the age cohort.
that’s odd because I’m yet to find an Industry fund that has outperformed them when you adjust the Asset Allocation and compare like for like.
Imagine how many times union fund members have been mislead by being told they were invested in “balanced” funds that were actually 95% invested in growth assets. Any action here ASIC? Didn’t think so.