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CFSIL liable for misleading super members
The Federal Court has declared that Colonial First State Investments Limited (CFS), as trustee for the Colonial First State FirstChoice Superannuation Trust (FirstChoice Fund), made false or misleading representations and engaged in misleading and deceptive conduct when communicating with members.
The court found that on at least 12,978 occasions, in communication with members of the FirstChoice Fund, Colonial made misleading representations regarding investment directions by encouraging them to stay with the FirstChoice Fund rather than move to the MySuper product.
The misleading or deceptive conduct by CFS included telling its members that recent legislative changes required CFS to contact them and obtain an investment direction to stay in the FirstChoice Fund when that was not the case.
CFS also failed to tell members that if CFS did not receive an investment direction from the member, it was required to transfer the member's super contributions into a MySuper product.
Australian Securities and Investments Commission (ASIC) deputy chair, Sarah Court, said: “Superannuation fund members need to receive clear and accurate information to make informed decisions.
“ASIC alleged Colonial made misleading representations which may have impacted members’ decisions about where to keep their funds and may have resulted in members’ funds being kept in higher fee-paying super products that included commissions. These actions did not put members’ interests first.”
The court declared that CFS, between 18 March, 2014, and 21 July, 2016:
- Engaged in misleading and deceptive conduct by sending 12,911 letters to members containing misleading representations about investment directions;
- Made false or misleading representations and engaged in misleading and deceptive conduct in 70 calls to members about investment directions;
- Failed to provide a ‘general advice warning,’ as required by the Corporations Act, in 17 calls to members; and
- Failed to do all things necessary to ensure the financial services covered by its financial services licence were provided efficiently, honestly and fairly.
CFS consented to these declarations being made and a penalty hearing has been listed for 12 October, 2021.
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