ASIC has found Colonial First State gave its superannuation customers misleading investment advice.
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The Commonwealth Bank of Australia (ASX: CBA) share price is gaining despite the Federal Court finding its subsidiary misled superannuation members.
The Federal Court has declared CBA’s subsidiary Colonial First State Investments misled and deceived its members at least 12,978 times.
Right now, the CBA share price is $103, 0.84% higher than its previous closing price.
Let’s take a closer look at the findings against CBA’s wealth management subsidiary.
Colonial found to have misled members
The CBA share price is in the green despite Colonial being found to have given its superannuation customers misleading investment advice.
The Federal Court found that, between 2014 and 2016, Colonial told some members to continue using its FirstChoice Superannuation Trust.
It did so despite the Superannuation Industry Act requiring all superannuation be paid into a MySuper product since 2012.
The Australian Securities and Investments Commission (ASIC) launched the proceedings against Colonial.
ASIC claimed Colonial told members it needed their direction to keep them in the FirstChoice fund due to legislative changes.
It also alleged Colonial failed to tell members that, if it didn’t get a direction, it would have been forced to transfer the member’s superannuation contributions into a MySuper product.
Colonial has apologised to those affected by its communications and is finalising remediations.
According to Colonial, a penalty hearing will be held in late 2021.
ASIC’s deputy chair, Sarah Court, commented on the findings:
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.
CBA share price snapshot
The Commonwealth Bank share price has been performing well on the ASX lately.
It is currently 25% higher than it was at the start of 2021. Additionally, it has gained 50% since this time last year.
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Motley Fool contributor Brooke Cooper has no position in any of the stocks mentioned.
The Motley Fool Australia’s parent company Motley Fool Holdings Inc. has no position in any of the stocks mentioned. The Motley Fool Australia has no position in any of the stocks mentioned. The Motley Fool has a disclosure policy. This article contains general investment advice only (under AFSL 400691). Authorised by Bruce Jackson.