The Australian Securities and Investment Commission announced its civil penalty proceeding Federal Court of Australia against Commonwealth Bank of Australia (CBA) and CBA’s subsidiary, Colonial First State Investments Limited (CFSIL) regarding alleged conflicted remuneration paid by CFSIL to CBA.
ASIC claims that between 1 July 2013 and 30 June 2019 CFSIL paid $22 million in conflicted remuneration to CBA for the distribution of Essential Super, a superannuation product issued by CFSIL. CBA distributed the Essential Super product resulting in approximately 390,000 individuals becoming members of the Commonwealth Essential Super fund under the arrangements.
The Australian regulator alleges that the arrangements between CBA and CFSIL breached the ban on conflicted remuneration as the arrangements could influence the choice of financial product recommended by CBA to retail clients or the financial product advice.
ASIC is looking for civil penalties against CBA and CFSIL. The maximum penalty could go up to $1 million for each of the companies.
Deputy Chair Daniel Crennan QC said:
This investigation is related to a Royal Commission referral to ASIC arising from the superannuation round of the hearings. This proceeding reflects the ongoing commitment by ASIC’s Office of Enforcement and its Royal Commission Litigation Program to bring the Royal Commission’s referrals and case studies to litigation when appropriate.
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