CBA defied a request from APRA to accelerate the transfer of 60,000 members to MySuper in order to placate the bank’s aligned advisers, the royal commission has heard.
Appearing before the royal commission hearings into superannuation yesterday, Colonial First State (CFS) executive general manager Linda Elkins was questioned about CBA’s handling of the MySuper transition.
From 1 January 2014, employers could only make default contributions to a registrable superannuation entity (RSE) offering a MySuper product.
Counsel assisting Michael Hodge established in his questions to Ms Elkins that CBA had breached the law 15,000 times by receiving default contributions into high-fee-paying accounts after 1 January 2014.
RSEs were also given a deadline of 1 July 2017 to transfer existing accrued default accounts (ADAs) to an approved MySuper product.
In June 2014, Mr Hodge established, the board of CFS was told by management that “APRA has requested that you accelerate the transition for 60,000 [ADA] members”.
“This suggestion has significant business implications as the original transition date is 2016,” the CFS board was told in June 2014.
Mr Hodge asked Ms Elkins: “Was one of the issues of which you were aware that immediately moving these ADAs over to MySuper would affect the relationship between Colonial and its advisers?”
“I was aware that advisers were impacted by this, yes,” Ms Elkins replied. “I don't know that it follows it would affect our relationship with the advisers but we were aware that advisers were – were concerned, yes.”
Moving the 60,000 into lower-fee MySuper products would have the effect of turning off grandfathered commissions for advisers, the royal commission has heard.
CFS, like other retail super providers, was eager to have ADA clients make an “investment decision” so that they would be considered a ‘Choice’ member and therefore ineligible for transfer to a MySuper product.
“And that was why you were taking active steps for the benefit of advisers to obtain investment directions from members?” asked Mr Hodge.
“We were taking active steps to ensure the members had information to – to assist them with the choices they had,” replied Ms Elkins.
Hodge continued: “The purpose of obtaining those investment directions, or a purpose, I’m sorry, for obtaining those investment directions was to benefit advisers?
“That wasn’t the purpose,” replied Ms Elkins.
“That was a purpose?” Mr Hodge asked.
“It’s – it – well, yes,” she said.
The hearings continue.
You can follow all of the action on the InvestorDaily live blog: https://www.investordaily.com.au/superannuation/43410-royal-commission-superannuation-hearings
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