The Federal Court has ordered Colonial First State Investments Limited (Colonial), as trustee for the Colonial First State FirstChoice Superannuation Trust (FirstChoice Fund), to pay a penalty of $20 million for misleading communications with members.
The Court noted this to be a substantial penalty for serious contraventions of the law.
The Court previously declared Colonial had breached the ASIC Act and Corporations Act when communicating to members on at least 12,978 occasions (21-237MR). The misleading or deceptive conduct by Colonial included:
- telling its members that legislative changes required Colonial to contact them and obtain an investment direction to stay in the FirstChoice Fund when that was not the case; and
- failing to tell members that if Colonial did not receive an investment direction from the member, it was required to transfer the member’s superannuation contributions into a MySuper product.
The Court found that the misleading communication was intended to encourage members to stay with the FirstChoice Fund rather than move to the MySuper product.
ASIC Deputy Chair Sarah Court said, ‘The $20 million penalty handed down to Colonial is a timely reminder to superannuation trustees not to mislead members for their own benefit. Trustees have an obligation to provide their members with balanced and accurate information that enables them to make informed decisions about their retirement savings.
‘Superannuation represents the future financial security of all Australians. We want to see funds operate in a way that is fair for members and promotes confidence in superannuation,’ concluded Deputy Chair Court.
In his decision, Justice Murphy found that Colonial’s conduct ‘involved false or misleading representations made to approximately 13,000 members of the fund, in a concerted campaign which went on for more than two years’ and that ‘its contravening conduct involved, in effect, seeking to take advantage of members whose interests it was, as trustee of the fund, duty-bound to protect.’
The Court acknowledged Colonial’s consent to the declarations of liability and its ongoing remediation program, and said that without the remediation program the penalty would have been higher.
Colonial was also ordered to publish an Adverse Publicity Order and to pay ASIC’s costs.