Fund Regulatory Update

CFS to pay $20m for misleading communication with super members

The Federal Court has ordered Colonial First State Investments Limited (as trustee for the Colonial First State FirstChoice Superannuation Trust) to pay a $20 million penalty for misleading communications to super members. A previous Court declaration saw CFS having breached the Corporations Act and ASIC Act when communicating to members on almost 13,000 occasions.

The specifics of the misleading communications include telling members that legislative changes required CFS to contact them to obtain an investment direction to stay in the FirstChoice Fund when this was not true, and failing to inform members that unless the fund received an investment direction from the member, it was required to transfer their superannuation into a MySuper product.

It was found that the misleading communications were designed to encourage members to remain with the FirstChoice Fund, and not to move to the MySuper product. The campaign went on for over two years, where the Court found it sought to take advantage of members.

So far, CFS has paid over $67 million to remediate losses to almost 6,000 members who received the calls.