June 23 (Reuters) - Australia’s corporate regulator said on Tuesday it commenced civil penalty proceedings against Commonwealth Bank of Australia and its wealth management unit over alleged conflicted remuneration paid in distribution of a superannuation product.
Conflicted remuneration relates to any benefit, whether monetary or non-monetary, given to an Australian financial services licensee who provides financial product advice to individuals.
More than A$22 million ($15.22 million) in conflicted remuneration was paid by Colonial First State Investments Ltd (CFSIL) to CBA for the distribution of its Essential Super plan between July 2013 and June 2019, said the Australian Securities and Investments Commission (ASIC).
ASIC said it is seeking civil penalties against both CBA and CFSIL, adding that each contravention attracts a maximum civil penalty of up to A$1 million for both CBA and CFSIL.
“This investigation is related to a Royal Commission referral to ASIC arising from the superannuation round of the hearings,” ASIC Deputy Chair Daniel Crennan QC said in a statement.
The Royal Commission inquiry here:~:text=Australia%20vows%20to%20clean%20up%20financial%20sector%20after%20landmark%20misconduct%20inquiry,-Jonathan%20Barrett%2C%20Swati&text=Regulators%20will%20be%20subjected%20to,the%20so-called%20Royal%20Commission uncovered widespread misconduct in the financial services industry, including charging customers for service not rendered and the deception of regulators.
CBA on Monday acknowledged the proceedings brought by ASIC and said CFSIL and CBA are reviewing ASIC’s claim.
CBA, the country’s biggest lender, in May sold 55% of CFSIL to private equity giant KKR & Co Inc for A$1.7 billion. The transaction is expected to completed in the first half of 2021.
In March, ASIC filed a civil lawsuit against CFSIL for deceptive product communication between March 2014 and August 2016, hindering customers of the FirstChoice Fund from transitioning to the cheaper MySuper fund.
$1 = 1.4455 Australian dollars Reporting by Shruti Sonal in Bengaluru; Editing by Christopher Cushing