ASIC launches appeal against loss of CFS, CBA conflicted remuneration case
The Australian Securities and Investments Commission (ASIC) has doubled down on its legal action against Colonial First State Investments and the Commonwealth Bank over conflicted remuneration by appealing a Federal Court decision.
ASIC has announced it is appealing the Federal Court’s decision to dismiss an ASIC alction alleging that CFS and the Commonwealth Bank breached conflicted remuneration laws.
It has justified the appeal by saying it is in defence of the operation of the conflicted remuneration laws.
ASIC had alleged that Colonial and CBA breached conflicted remuneration laws when they reached an agreement in which Colonial paid CBA to distribute its Essential Super product through CBA’s branch and digital channels. Essential Super was distributed to over 390,000 individuals.
The Federal Court dismissed ASIC’s proceedings on 29 September 2022 .
Explaining the appeal, ASIC deputy chair, Sarah Court said “We have appealed this decision because we are concerned that it will limit the operation of conflicted remuneration laws introduced in 2012. Conflicted remuneration has the potential to cause significant consumer harm because it can prevent consumers from receiving appropriate advice and financial products free of influence.”
The conflicted and other banned remuneration provisions were introduced in June 2012 as part of the Future of Financial Advice reforms, representing the Australian Government’s response to the 2009 Inquiry into financial products and services in Australia by the Parliamentary Joint Committee on Corporations and Financial Services.
The appeal will be heard by the Full Federal Court on a date to be determined.
Of course they are, their litigation is funded by Advisers and Licensees, via the unfair Levy. They can afford to roll the dice with no repercussions.
Then, if a win, ASIC retain in general revenue all the while getting more staff while Advice firms suffer, further funding the regulator.
To then Federally have the gaul for an inquiry into why it’s so expensive to provide Advice? Add this to the CSLR funding an unregulated unfair unbalanced inexperienced AFCA, and I’m just about done with this profession.
Well said! Couldn’t agree more.
It makes no sense that ASIC can unilaterally decide to rack up legal fees with no ceiling, make the advisers/licensees pay for it (vast majority of whom have never been the subject of an investigation) and then keep the winnings from the court cases in their coffers? Only in Australia. So much for being a land of a “fair go”…
As for AFCA – what a joke. Their decisions are rarely in favour of consumers if it’s a complaint against an insurance company. Just gives insurers free reign to do what they want without any fear of repercussion.
still waiting on ASIC to prosecute union funds for conflicted remuneration, vertical integration, falsification of returns & misinformation, paying commissions out for referrals by unions…
ASIC is corrupt
More Adviser funded ASIC litigation when it’s Banks / Institutions paying vertically owned products hidden commissions amongst themselves.
No Advice provided, No Advisers involved.
ASIC, why are Advisers funding this ?
ASIC is not there to ‘support advisers’, its role is to advance consumer’s rights and interests. That’s what it’s doing, as best it can. And advisers are NOT funding the litigation – Australian taxpayers are – with levies on advisers a reasonable cost of doing business…a bit like PI cover and education courses. All would be less expensive if we didn’t have so many advisers doing the wrong things. I spent 40 years as an adviser, often having to apologise to many clients (maybe one in three) for the pathetic and expensive ‘work’ of their previous advisers. Those of you who do the right thing should consider spending more of your time and vitriol on those in the industry who make you look so bad. Some of them are ‘big writers’, while others just dip in for a while and then move on, but they all need to be exposed and booted, rather than protected and/or ignored. Australians need to be able to trust advisers. In the main they can, but there’s still a rump whose practices make life hard for the rest and yet we don’t see enough work to get rid of them – just plenty of ASIC-blaming. ASIC isn’t perfect, but the ‘crook’ advisers are a far worse pox on the advice industry.
You must not have been around in the last 15 years of ASIC creating a legislative nightmare that has caused advisers to leave in droves and clients to suffer the extraordinary hike in adviser fees.
Do you think we like saying “Bye bye” to clients because we can no longer afford to serve them?
ASIC have never cared for clients. Otherwise they would have acted differently. All they care about is making it more difficult for advisers to provide service!!!
Please explain how Advisers were involved in this court case?
And as zero Advisers or Advice was involved why Advisers should fund ASICs court costs?
You are right to say that ASIC’s role is to advance consumer’s rights and interests. But you are wrong to say ASIC is doing that as best it can. ASIC is failing dismally in that role. Rather than taking targeted and proportionate action against a minority of wrongdoers, ASIC persecutes all financial advisers through draconian and indiscriminate measures. They regard all advisers as guilty, and effectively require all advisers to implement huge and costly compliance defences against ASIC persecution. This makes it much more difficult for consumers to access affordable professional advice. It pushes more consumers into the arms of dodgy products and scams, and forces more consumers to make ill informed decisions based on advertising and conflicted illegal advice. Consumers are much worse off due to ASIC’s indiscriminate persecution of professional advisers, and ASIC’s relative inaction against the primary sources of consumer harm.
Why did you apologise for the behaviour of dodgy advisers Philip? It wasn’t your fault. You didn’t tell them what to do, and you didn’t have the power to stop them. The honest majority should never be blamed for the behaviour of a minority that share similar demographic characteristics. That applies whether it’s an occupation, a religion, a nationality, or a gender.
Financial advice is a not a self regulating profession. It is governed by forests of legislation and towers of regulatory bureaucrats. Legislators and regulators have the power and responsibility to prevent bad financial advice. They have failed to implement sensible, targeted, measures to do so. They have compounded their failure by persecuting the honest majority instead. They are the ones who should be apologising. They are the ones who should be held accountable.
what would be the reaction if we started charging a line item by client for asic levy and clr. Maybe then the noise from the consumer would start to resonate on deaf ears
maybe we should. super funds charge the ORR levy as a line item.
100% correct. Post GFC, ASIC’s cultural alignment was directly influenced by Labor appointees in their highest ranks with a mandate to ‘clear out the vermin’ i.e. advisers.
When the later farcical royal commission was furnished with biased anti-adviser information from ASIC, and yet ASIC still got a rap on the knuckles, their team meeting mantra changed to ‘heads on sticks’, (again, advisers heads specifically); a disgusting, sickening idiom that typified the twisted, biased, corrupt mentality in a supposedly ‘privatised’ governmental department that has no oversight or accountability – except apparently to its left-wing political leanings and the perverse need to continue to display scalps via media stories on flaying advisers or the private sector of funds management.
Amongst all that, you have the excessive self-interest hierarchical need of those in positions of power within ASIC to preserve and bolster their positions, further enhance their ‘importance’ and grow their already grotesquely bloated pay-packets, (the sole reason they became a ‘privatised’ government department, as mentioned earlier). All this by perpetuating the vilification of advisers and investment houses – except unionised super.
ASIC is corrupt, morally bankrupt and a sick twisted vile ‘police force’ that have already profiled us and treat all as guilty – not due to race, as some police were found to be doing in certain ethnicities, but solely due to occupation.
Not sure if you are still in touch with what is going on in the industry after 40 years if you are still in it, but 100% the ASIC levy is covering ASICs litigation against the finance industry. The banks had a culture of sell at all costs which lead to their demise in the industry and assisted the decline of adviser numbers by over 50%.As with any industry there is always the faction who ruin it for everyone else but with the increased standards now this will be less of an issue.The extra administration brought on by the blame game that was the Royal Commission playing political football is increasing the cost of doing business but if you think by any stretch it is “a reasonable cost of doing business” then perhaps you need to be booted.
It’s not a reasonable cost to do business, in regard to other professions or nations. Even estimates provided mid year were under quoted by over 53% prior to the freeze, you have an inherent misunderstanding of the impact, cost and funding of this litigation. It’s borne from the levy and if successful retained in general revenue with no relationship to current advisers bearing the cost.