CBA and Colonial First State were prosecuted for rupturing the conflicted remuneration ban
The Commonwealth Bank of Australia (CBA) and its subsidiary, Colonial First State Investments Limited (CFSIL), are facing legal action by the Australian Securities and Investments Commission (ASIC) for alleged breaches of the conflicted remuneration ban. The ASIC claims that CFSIL paid over $22 million to CBA for the distribution of a superannuation product, which may have influenced financial product choices and advice provided by CBA. Dive deeper into the details of this case and its implications for the financial industry.
The ASIC has sued the Commonwealth Bank of Australia and its subsidiary Colonial First State Investments Limited (CFSIL) in the Federal Court of Australia for the alleged conflicted remuneration paid by CFSIL to CBA.
The transaction in question occurred between 1 July 2013 and 30 June 2019 and was worth more than $22 million. The funds were paid by CFSIL to the CBA for the distribution of a superannuation product issued by the CFSIL, Essential Super. CBA distributed the Essential Super product using both its branch and digital channels, resulting in approximately 390,000 individuals becoming affiliates and members of the Superfund Scheme.
The ASIC claims the arrangement breaches a ban on conflicted remuneration because it may influence the choice of financial products, financial product services, and the financial advice given by the CBA to clients.
According to the ASIC, the maximum civil penalties against CBA and CSIL can reach as high as $1 million.
Originally published by Steffy Bogdanova on LeapRate.
