In a statement, ASIC said its case against Commonwealth Bank and Colonial First State Investments limited (CFSIL) related to alleged conflicted remuneration paid between 2013 and 2019.
“ASIC alleges that more than $22 million in conflicted remuneration was paid by CFSIL to CBA for the distribution of Essential Super, a superannuation product issued by CFSIL,” the regulator said.
“CBA distributed the Essential Super product using its branch and digital channels. Approximately 390,000 individuals became members of the Commonwealth Essential Super fund under the arrangements.”
ASIC said it believed the arrangements between CBA and CFSIL breached the ban on conflicted remuneration under ss963E and 963K of the Corporations Act because the arrangements could reasonably be expected to influence the choice of financial product recommended by CBA to retail clients, and the financial advice given by CBA to retail clients.
“ASIC is seeking civil penalties against both CBA and CFSIL in relation to the alleged misconduct,” the regulator said.
“Each contravention attracts a maximum civil penalty of up to $1 million for each of CBA and CFSIL.”
The case relates to a referral made to the regulator as a result of the superannuation round of hearings in the financial services royal commission.
Ladies and gents, ASIC is trying to establish a legal precedent here. This is the beginning of the end.
This is why compulsory super is such a rort. We have to keep giving 10% of our gross salary to these cowboys every year by law. Thanks Paul Keating – not.
This seems like a bit of a long bow by ASIC given CFS is a wholly owned subsidiary of CBA. It’s essentially an internal transfer.
On the other hand, a similar conflicted remuneration arrangement has existed for much longer between the credit unions and Bridges. Why has this been allowed? Is it because CBA is an ASIC target and credit unions are an ASIC favourite?
Bridges, as part of IOOF, have also been an ASIC target by proxy. Having tried and failed with IOOF, I guess they are looking for a new high profile scalp.
I have always been suss on bridges – they always go to the other side, if you know what I mean.
ASIC is corrupt and doing this to help their union super mates – and turn a blind eye to all the union super conflicted remuneration which when you aggragate it, leaves this measly $22mill as a paltry shadow to the extent of their rorts!!
When I got my coffee today the barista did not tell me that the barista across the road was 10 cents cheaper. Over my lifetime my barista is costing me thousands of dollars. How do I mount a class action ?
We will help…
be thoughtful, do it my way. Too Cryptic??
What about the bonus payments that would have been paid to lord knows how many layers of staff to promote the product. Keep digging.
Well hopefully the obvious elephant in the room will be seen as a legal precedent to go after conflicted industry funds…
I agree George Orwell – industry funds push their ‘own’ products and services and have little detailed review; they just keep saying “where all in this together”!.. What about other industries such as supermarkets and department stores… they sell their own branded products and pay revenue for these products and services? APRA and ASIC should be targeting fraud and improper advice…
ASIC put fees up by 30% , they gave gone to far. This is not aiding the public but making the industry impossible to operate in
and the shareholder will pay !
So lets understand this. The penalty is $1,000,000 for each of 390,000. So thats, lets see some $390,000,000,000.
My hunch is it will be watered down to say $39,000,000, a stiff talking to arrive at a promise to be good ethical people and lets move on. After all, this could send the bank broke. Remember the money laudering case where there was 52,000 such occurrences and they were let of lightly with bank bosses, being allowed to keep their bonuses. No conflicts there of course. This is a disgrace. Lets see the regulator regulate. Personally, I think Elvis will play in concert before this ever happens. But if this was an IFA, you are screwed.
Give it up seriously, every connection to a product is conflicted. Everyone is related every product is linked in every way from manager, custodian, legal, accounting, auditing, employment.
This industry has gone stark raving mad.
Time to grow up and appreciate a good product is a good product and a bad seed is a bad seed.
Ethics exam??? You are joking integrity is genetic.
CBA and CFS, a pack of bloody crooks yet again found to be doing the wrong thing!!!!! Why have real financial planners been targeted all these years and smashed by over regulation???? What a disgrace.
Of course, the Union Super funds, who are vertically integrated & pay substantial bonuses to their inhouse intrafund advisers, aren’t conflicted. It’s like Animal Farm. All animals are equal, but some animals (approx 1000 intrafund advisers) are more equal than others.
Interesting point but the work of an intrafund adviser is anecdotally incredibly boring because your APL is so short.
Intra-fund advice is a joke and ASIC is in on the joke.
Suggested Correction: Intra-fund advice is a joke and ASIC is the clown acting as ringmaster
If life is so easy as an Industry fund adviser, why don’t you make the switch?
He/she dosen’t want to become a salesperson. They’d rather be an adviser.
Seriously, all the advisers with AMP, etc are nothing more than salespeople flogging their own limited list of products.
Oh you mean sell my soul to an industry fund and become an industry fund evangelist ?
It’s not really the same though – you see an industry fund ad or approach an industry fund and are sold an industry fund product. That’s not the problem here. The problem is you walk in for a banking transaction and are sold a product from another company and that staff member is paid a commission or bonus for that sale. It’s not some surprise – this is specifically prohibited in the Regulatory Guidelines and Corporations act. I get that it’s a transfer payment between two companies owned by the same group but the confusion over who is being sold what by whom and whose interest it serves to do so is a problem worth solving.
Much the same argument as AMP branded advisers promoting AMP products is fine, but Charter/Hillross/Ipac advisers promoting AMP products is not.
Yeah nah, industry super is still the same in a relative way – I rock up to my employment and think the boss is doing the right thing by me and the other employees, so trust where they put my super. No clue that fund was ‘chosen’ not on merit by likely either by some union orchestrated ‘award’ requirement or else they wined, dined and literally bribed the employer if there were enough employees to make it attractive. And if this was won because a union official ‘spotted’ the target, they were richly rewarded by the fund. there have been numerous reported occurrences that ASIC are aware of, but have chosen to do nothing about. ASIC is corrupt.
Different situation but absolutely valid point.