In a statement, the Australian Securities and Investments Commission (ASIC) said the Federal Court has dismissed its case against Commonwealth Bank (CBA) and Colonial First State Investments Limited (Colonial) related to alleged conflicted remuneration paid between 2013 and 2019.
The court found that Colonial did not breach the law when it agreed to pay CBA to distribute Essential Super.
The arrangements between Colonial and CBA regarding the distribution of Essential Super was the subject of a case study by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
Justice Anderson found that the payments made by Colonial to CBA did not constitute benefits within the definition of “conflicted remuneration”. He further highlighted that the statutory context of the conflicted remuneration provisions was focused on situations such as where a financial adviser had a financial incentive.
“ASIC pursued this case because we were concerned that the arrangements between Colonial and CBA had the potential to influence the choice of financial product recommended to retail clients or the advice given to retail clients. ASIC will carefully consider the judgment,” ASIC deputy chair Sarah Court said.
“ASIC will continue to work to ensure retail clients receive appropriate advice that aligns with their interests,” concluded Ms Court.
CBA staff signed up over 390,000 individuals to the Essential Super product between July 2013 and June 2019.
Back in 2020, at the commencement of ASIC’s proceedings, the corporate regulator said it believed the arrangements between CBA and Colonial breached the ban on conflicted remuneration under ss963E and 963K of the Corporations Act because the arrangements could reasonably be expected to influence the choice of financial product recommended by CBA to retail clients, and the financial advice given by CBA to retail clients.
“ASIC is seeking civil penalties against both CBA and CFSIL in relation to the alleged misconduct,” the regulator said at the time.
Each contravention was said to attract a maximum civil penalty of up to $1 million for each of CBA and Colonial.
