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Around 390,000 people signed up to a superannuation fund through the alleged influence of $22 million in conflicted remuneration from Colonial First State to the Commonwealth Bank (ASX: CBA), according to civil proceedings filed by the corporate watchdog.
The Australian Securities and Investments Commission (ASIC) alleges the payments for the distribution of Essential Super over six years to mid-2019 were in breach of a ban on conflicted remuneration under the Corporations Act.
As a Colonial First State product, Essential Super was distributed through CBA's branch and digital channels, with almost 400,000 individuals becoming members under the arrangements.
ASIC alleges the payments between 1 July 2013 and 30 June 2019 could reasonably be expected to influence:
- the choice of financial product recommended by CBA to retail clients; or
- the financial product advice given by CBA to retail clients.
ASIC is seeking civil penalties against both CBA and Colonial First State in relation to the alleged misconduct, with each contravention attracting a maximum civil penalty of up to $1 million for each party.
"This investigation is related to a Royal Commission referral to ASIC arising from the superannuation round of the hearings," says Deputy Chair Daniel Crennan QC.
"This proceeding reflects the ongoing commitment by ASIC's Office of Enforcement and its Royal Commission Litigation Program to bring the Royal Commission's referrals and case studies to litigation when appropriate."
The announcement comes within two weeks of law firm Slater & Gordon (ASX: SGH) filing a class action against CBA for allegedly selling junk credit card and personal loan insurance to customers.
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