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Colonial misled superannuation customers

·1-min read

Superannuation provider Colonial First State has misled thousands of customers over whether they should choose a low-fee product.

The Federal Court has found Colonial made false or misleading statements about whether customers could stay in its FirstChoice Fund or switch to a simpler alternative.

Colonial told customers that changes to superannuation laws meant it had to ask permission to keep them in the FirstChoice Fund. This was not the case.

The government had earlier required providers to offer a simple, low-fee product called MySuper. These products provide balanced returns to benefit most workers.

Colonial did not say that if customers did not make a decision, their super contributions were to be moved to a MySuper product.

Colonial made these misleading communications at least 12,978 times through letters and calls between 2014 and 2016.

Australian Securities and Investments Commission deputy chair Sarah Court said Colonial's actions may have led members to keep their funds in higher fee-paying products.

ASIC began legal action last year.

Colonial said it apologised unreservedly, and its compensation to customers is more than 99 per cent complete.

Colonial First State is owned by the Commonwealth Bank of Australia.

The court will begin deciding on penalties at a hearing on October 12, which may include fines.

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