After being found guilty of misleading superannuation members regarding investment directions on at least 12,978 occasions last month, the Court has ordered Colonial, as trustee for the Colonial First State FirstChoice Superannuation Trust, to pay the penalty.
CFS was found to have engaged in misleading conduct between 18 March 2014 and 21 July 2016, including telling its members that legislative changes required Colonial to contact them and obtain an investment direction to stay in the FirstChoice Fund when that was not the case and failing.
Members were also told that if Colonial did not receive an investment direction from the member, it was required to transfer the member’s superannuation contributions into a MySuper product.
Justice Murphy found that Colonial’s “contravening conduct involved, in effect, seeking to take advantage of members whose interests it was, as trustee of the fund, duty-bound to protect”.
“The $20 million penalty handed down to Colonial is a timely reminder to superannuation trustees not to mislead members for their own benefit,” ASIC deputy chair Sarah Court said.
“Trustees have an obligation to provide their members with balanced and accurate information that enables them to make informed decisions about their retirement savings.
“Superannuation represents the future financial security of all Australians. We want to see funds operate in a way that is fair for members and promotes confidence in superannuation.”
Colonial Superannuation CEO Kelly Power responded to the decision on Tuesday.
“We have apologised unreservedly to members impacted by these historical issues and have taken action to fix past breaches including by compensating affected members, with interest,” Ms Power said.
“In the past three years, we have put every effort into improving quality and management oversight, implementing regulatory reforms and making important improvements to our business following issues identified in the Royal Commission.
“As we finalise the process of establishing CFS as a standalone business, we are making significant investments to be a better business with members’ interests at the heart of everything we do.”
