ASIC failed to overturn a Federal Court finding that the Commonwealth Bank of Australia and Colonial First State did not receive “conflicted remuneration” benefits under a superannuation agreement.
The Full Court of the Federal Court of Australia dismissed an appeal brought by the corporate regulator, which had alleged Colonial breached the law when it paid CBA to distribute superannuation trust, Essential Super.
ASIC commenced proceedings in June 2020 against Colonial First State and CBA after Essential Super, a MySuper product issued by Colonial First State Investments Limited (CFSIL), had been a case study in the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Both CBA and CFS denied the allegations and defended the proceedings.
In a statement released 17 August, ASIC deputy chair Sarah Court commented: “ASIC pursued this matter because conflicted remuneration has the potential to cause consumers to be given financial product advice that may not suit their needs.
“While the Full Court dismissed the appeal it accepted a number of ASIC’s submissions and, importantly, clarified the meaning and reach of the conflicted remuneration provisions for future matters.”
The regulator will consider the judgement over the next 28 days regarding whether it will lodge any application for special leave to appeal to the High Court.
In September last year, Justice Stewart Anderson found the payments made by Colonial to CBA did not constitute benefits within the definition of “conflicted remuneration”.
He added the statutory context of the provisions were focused on situations where a financial advisor had a financial incentive.
The Federal Court dismissed ASIC’s proceedings on 29 September. ASIC then served a notice of appeal to indicate their intentions to appeal the decision to dismiss the proceedings on 26 October.
The hearing of ASIC’s appeal concluded on 23 February 2023.
On 17 August, the Full Court found Justice Anderson was “correct to conclude the benefits were not conflicting remuneration”.
In addition to dismissing the appeal, ASIC has been ordered to pay the costs of the appeal for CBA and CFS.
This article first appeared on Money Management’s sister title Lawyers Weekly.
If the Life Underwriters Asco. had had that kind of power behind them conflicted commission may hav been treated quite differently.After all the gov Solicitor told Bill Shorten IT WOULD NOT BE LEGAL TO JUST CANCEL COMMISSIONS FOR PAST WORK DONE.The libs, starting with the captain for five sepperate ineffective govts chose to ignor this…. JG
Thanks ASIC, just waste as much of our money as you like!!!
Can someone explain to me why ASIC is chasing CBA and Colonial when neither of them contribute to ASIC through the funding levy? Small business advisers now pay for ASIC and therefore this legal action by ASIC is costing us money. Even if ASIC win any fines collected go to government consolidated revenue therefore this type of legal action is a cost borne by us.
Did the ASIC Levy (great big tax) paid from small financial advice businesses pay for ASIC’s court case?
ASIC need to be held accountable for this. They lose outright and have the gall to appeal and still lose yet Advisers are now going to have to pick up the tab for their own bill as well as CBA & CFS. No shits given by ASIC as they see us as an endless pit of money to fund their day job. Way to lose more advisers champions.