Colonial First State

Commonwealth Bank and its wealth management arm Colonial First State have been hit by a class action law suit over allegedly uncompetitive superannuation returns.

Commonwealth Bank will sell its asset management arm to Mitsubishi UFJ Financial Group for $2.9 billion in a surprise sale, the latest business to be sold by an Australian financial giant amid unprecedented regulatory scrutiny.

Commonwealth Bank of Australia is suspending the demerger of its mortgage broking and wealth management businesses to focus on customer remediation and implementing the recommendations of the royal commission.

Commonwealth Bank is setting aside $1.5 billion for potential defaults on account of COVID-19-related shutdowns and will sell a majority stake in its Colonial First State wealth management unit, as it braces for an economic slowdown and falls in house prices.

The Australian Securities and Investments Commission is suing the Commonwealth Bank and subsidiary Colonial First State Investments over a banking royal commission finding that the latter paid bank staff to promote a superannuation product to customers.

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

Colonial First State has been ordered to pay a substantial penalty by the Federal Court after misleading nearly 13,000 of its members about their superannuation.