The Australian Prudential Regulation Authority (APRA) has imposed a new registrable superannuation entity (RSE) licence condition on Colonial First State Investments Limited (CFSIL) to ensure members’ best interests are prioritised in its decision-making.
APRA’s decision follows an investigation into matters referred to it by the financial services Royal Commission in February 2019. The Royal Commission had formed the view that CFSIL’s decisions not to bring the migration of certain cohorts of its FirstChoice members into MySuper products forward from just prior to the legal deadline, and to grandfather certain fee arrangements, may not have been in its members’ best interests.
While APRA has not concluded that CFSIL breached the Superannuation Industry (Supervision) Act 1993, its investigation raised concerns about the adequacy of CFSIL’s internal processes for demonstrating how members’ best interests were considered and prioritised.
As a result, APRA will impose a licence condition requiring CFSIL to record how it considers members’ best interests and members’ priority covenants when making decisions that materially affect their interests. This measure will improve CFSIL’s practices and also ensure APRA is better able to assess whether members’ best interests are being sufficiently considered and prioritised by CFSIL in future.
CFSIL did not oppose the application of the new condition, which comes into effect immediately.
CFSIL’s grandfathering of certain fee arrangements was one of 12 cases that Commissioner Kenneth Hayne referred to APRA for further investigation in handing down the Royal Commission’s Final Report last year.