Commonwealth Bank’s recently-announced spin-off CFS group must ensure it meets the legal definition required to continue describing itself as ‘independent’, according ASIC.
Commonwealth Bank announced via the ASX it will ‘demerge’ its wealth management and mortgage broking arms to create an “independent wealth management business” comprised of Colonial First State, Count Financial, Financial Wisdom, Colonial First State Global Asset Management and Aussie Home Loans.
Responding to questions from ifa, ASIC said it is unsure yet whether the new business meets the Corporations Act definition of ‘independent’, but cautioned the new business’ management to remain conscious of the requirements going forwards.
"Under s923A a financial services licensee can only describe itself as 'independent' if it meets certain requirements, including not receiving commission and operating without any conflicts of interest,” an ASIC spokesperson said.
“We would need to make further inquiries before we could determine if the new CBA wealth management business, once established, could call itself 'independent', but it is important that the current management understands this principle.”
On Tuesday, ifa reported that the Commonwealth Bank’s share price fell sharply following the announcement of the demerger, closing 2.65 per cent down on Monday afternoon.
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