Australia’s Commonwealth Bank faces hefty fines for alleged misconduct in the sale of pension products, regulators said Tuesday, the latest in a flurry of scandals to rock the country’s finance industry.
The Australian Securities and Investments Commission (ASIC) on Tuesday accused Commonwealth Bank (CBA) of receiving Aus$22 million ($15 million) in prohibited payments from a subsidiary, Colonial First State Investments, to promote its retirement fund to customers.
The corporate regulator said CBA, the country’s largest lender, sold the product to 390,000 customers via bank tellers and online over the six years to June 30, 2019.
The maximum fine for each breach of the law is Aus$1 million (US$690,000), and ASIC said it was pursuing financial penalties against both CBA and Colonial.
It did not reveal how many breaches it was alleging.
ASIC deputy chair Daniel Crennan said the case arose from a referral from a major inquiry into the banking industry — which last year exposed rampant malpractice across the highly profitable sector.
The Royal Commission found banks had charged fees to dead people and to others for no services at all, used aggressive sales tactics and provided poor advice that led to significant financial upheaval for clients.
ASIC alleged Colonial’s payments to CBA amounted to “conflicted remuneration”, which is banned, as they could have influenced the product recommendations or financial advice CBA gave to customers.
In a statement to the Australian Stock Exchange late Monday, CBA acknowledged the civil proceedings and said it was “reviewing ASIC’s claim”.
It comes just two years after CBA negotiated an Aus$700 million settlement with AUSTRAC after the financial agency found the bank committed widespread breaches of money-laundering rules.
All of Australia’s biggest banks have reported significant hits to profits as they reimburse hundreds of millions of dollars to wronged customers in the wake of the Royal Commission.