2.1 Background - Royal Commission

Colonial First State Investments Limited (CFSIL) and Avanteos Investments Limited (Avanteos) are two RSE licensees in the CBA Group. Each is part of the Colonial First State (CFS) business.[1]

CFSIL is the trustee of Colonial First State FirstChoice Superannuation Trust (FirstChoice fund), a public offer fund with over $71 billion funds under management and around 735,793 members.[2] The fund offers a range of products under the FirstChoice brand.[3] CFSIL is also the trustee of another fund called Commonwealth Essential Super.[4]

Avanteos is the trustee of various funds and the operator of investor directed portfolio services.[5] It provides products and services to around 71,000 investors and members holding superannuation, investment and pension assets invested through Avanteos with an approximate value of $29 billion.[6]

On 25 June 2018, CBA announced its intention to demerge its wealth management business, including the CFS businesses.[7] The CFS businesses (with other CBA wealth and mortgage broking businesses) will be transferred into a new entity, shares in which will be issued to CBA shareholders.

The Commission’s inquiries examined four aspects of the conduct of CFSIL and Avanteos:

the transition of accrued default account (ADA) balances and default contributions to a MySuper product;
the charging of fees for no service;
the sale of superannuation in CBA branches; and
the performance of members’ cash investments and related party arrangements.

The Commission heard evidence from Ms Linda Elkins, the Executive General Manager of CFS and a director of CFSIL and Mr Peter Chun, the General Manager of Distribution for CFS.

[1] Exhibit 5.182, Witness statement of Linda Elkins, 7 August 2018, 1 [2].

[2] Exhibit 5.180, Witness statement of Linda Elkins, 26 July 2018, 2 [14], 37, Annexure A.

[3] Exhibit 5.180, Witness statement of Linda Elkins, 26 July 2018, 3 [14]–[15]; Exhibit 5.232, Witness statement of Peter Chun, 31 July 2018, 2 [11].