ASIC hits CFS on MySuper charges

17 March 2020

The corporate watchdog has commenced civil penalty proceedings against Colonial First State Investments Limited (CFSIL), and as a trustee for the Colonial First State FirstChoice Superannuation Trust for breaches of the ASIC Act and the Corporations Act.

The Australian Securities and Investments Commission (ASIC) allege CFSIL sent misleading or deceptive communications to members of the FirstChoice Fund. This was regarding the provision of investment directions to stay within CSIL’s FirstChoice Fund rather than transitioning to CFSIL’s MySuper product.

“ASIC's case focuses on template letters sent to members, as well as, 46 telephone calls made in accordance with scripts. ASIC also alleges that CFSIL failed to provide a 'general advice warning' during the telephone calls in breach of s949A of the Corporations Act,” an ASIC announcement said.

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“It is notable that a total of 8,605 members provided an investment direction keeping them in the existing product."

ASIC contended that the communications also amounted to breaches of CFSIL's obligations:

  • To do all things necessary to ensure that the financial services covered by its financial services licence were provided efficiently, honestly and fairly, as required by s912A(1)(a) of the Corporations Act; and
  • As a financial service licensee to comply with financial services laws, as required by s912A(1)(c) of the Corporations Act.

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That sounds serious, misleading and deceptive, be surprising if they didn't get the same treatment as Dover did.

No different to what I have seen come from industry funds run by unions, except of course, that ASIC takes no action against them

The boards of industry funds are equally represented by employers and employee representatives from whatever particular industry group that has established the industry fund. Some even have independent directors. This is such a basic fact that so many commentators here show such ignorance.

There's never similar attacks on the money people running the for-profit funds.

What they are both doing is working to maximise the returns of FUM to their businesses. Advisors who base their recommendations on political and/or ideological grounds are not being professional. Advisors who dont get basic facts right are unprofessional.

You’re right Hedware. Sponsorship of football boxes for union hierarchy with not for profit funds, rubbish insurance terms for high cost, misleading and deceptive advertising on their 85/15 ‘balanced fund’, breach of fiduciary duty in unit pricing, questionable fund mergers and, despite your assertion to the contrary, no independence on boards (they fought the govt tooth and nail for a 33% min independent representation for crying out loud!!!).

Nothing to see here, shoot the messenger, rort still in progress.

Well done Hedware, you’re a credit to the union movement and ignorant of few facts yourself.

Sorry to disappoint you but I was not supporting industry funds nor unions. I was presenting the facts about the actual composition of industry super fund boards in an (vain) attempt to correct this misunderstanding by so many commentating here.

Sorry to disappoint you but there's plenty of sponsorships, lunches, etc offered by the for-profit funds. Maybe you haven't had an invitation.

BTW from first hand experience I dont necessarily see a lot of value in independent directors. They tend to go with the majority anyway, dont have any skin in the game, get paid too much for what they do, and you wonder if they are devoting as much attention as they are to their other directorships. Gerry Harvey doesn't believe in independent directors and nor do private equity funds. I've had a quick look at parent companies of managed funds and not all have independent directors but it was a quick look and difficult to find the status of directors easily.

In terms of your 33% argument, it was the boards of industry funds that were opposed to the imposition of independent directors - those boards were 50-50 employer-employee nominees - something that you like others keep overlooking.

I'll take your word on the other issues you raise as you seem to have a closer acquaintance to industry funds than I do.

Hedware, "What they are both doing is working to maximise the returns of FUM to their businesses". So you say.
Or, perhaps the Unions will not take any Industrial Action on the employer so long as the "employees money" is directed to the said Union Fund. No conflicts mate - nothing to see for your eyes. Just keep the money rolling in please. More and more fees - and plenty are % based. Money money money.

Heddy, you've gone from the union's valiant defender on a white steed, to a clown-like Don Quixote figure on a pink unicorn with that one, esepcially as you were noticeably absent from all comments regarding IFM rorting millions in bonuses.

Keep going champ, you dig yourself deeper in the toiletpaperless pile of s**t every time you race to their defence.

Re IFM - I agree - not a good look at all - wasn't around when news broke - havent heard much since.

I don't like excessive bonuses being paid to executives in the for-profit space because they come from excessive fees charged by for-profits, which makes the for-profits give poorer performances than industry funds (even with discounting the balanced paranoia). Cuts into my profits. Fees charged by Australian for-profits are way above fees charged by similar overseas funds.

I dont like paying fees for above benchmark performance by some funds as they dont give a discount on fees for underperformance. That's an ongoing rort.

John M, surely you understand union controlled funds are above the law and can do no wrong......even though though are more repugnant in their behaviour than any other entity.

Misleading and deceptive is on the beginning for them

The Marketing Manager at CFS previously worked for the industry funds. They just applied the same rules at CFS.

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