Australia's financial regulator launched proceedings against Commonwealth Bank of Australia and subsidiary Colonial First State Investments over remuneration relating to a superannuation fund.
The Australian Securities and Investments Commission said Tuesday it had begun civil penalty proceedings in the Federal Court of Australia in relation to alleged "conflicted remuneration" — any benefit given to a company that provides financial product advice to retail clients — paid by CFSIL to CBA from July 1, 2013, to June 30, 2019.
The regulator alleges that more than A$22 million ($15.1 million) in conflicted remuneration was paid by the money manager to its parent company for the distribution of the Commonwealth Essential Super fund. CFSIL is the trustee of the Sydney-based A$3.8 billion superannuation fund.
The ASIC announcement said CBA distributed the retirement plan using its branch and digital channels, with about 390,000 individuals becoming participants under the arrangement.
A breach was alleged by ASIC because the arrangements 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, the announcement said.
The regulator is seeking civil penalties against both CBA and CFSIL. Each breach carries a maximum penalty of up to A$1 million for each entity.
CBA acknowledged the proceedings by ASIC in a notice on its website. "CFSIL and CBA are reviewing ASIC's claim and will provide any further update as required," it said.
