July 2, 2020 / 7:59 AM / a month ago

Australian regulator imposes new conditions on Suncorp, CBA pension arms

July 2 (Reuters) - Australia’s prudential regulator said on Thursday said it has imposed new licensing conditions on the pension units of Commonwealth Bank of Australia and Suncorp Group following directions by a government-ordered enquiry.

The new conditions would require them to record how they consider the best interests of their customers while making decisions, the Australian Prudential Regulation Authority (APRA) said.

The authority noted that neither Suncorp Portfolio Services (SPSL) nor Colonial First State Investments (CFSIL) had breached pension laws.

The conditions follow separate investigations into the Suncorp and CBA units for delaying the transition of their customers to a cheaper MySuper product until just before a legal deadline, APRA said in a statement.

The government in 2014 ordered operators of pension funds, known as superannuation funds in Australia, to move customers with default investment options to the cheaper and simpler MySuper scheme.

The MySuper fund was designed as a part of a government-mandated scheme to provide workers with an economical pension fund that could be run by investment managers as trustees.

Australia’s corporate regulator had filed two lawsuits against CFSIL this year, accusing it of improperly collecting commission and deceptive product communication.

A Royal Commission enquiry uncovered widespread misconduct in Australia’s financial services industry, including charging customers for service not rendered.

“We will fully cooperate with APRA regarding the two additional conditions and will use this as a further opportunity to document our processes,” a Suncorp Portfolio Services spokeswoman said in an email to Reuters.

Commonwealth Bank also acknowledged the APRA action in a separate statement.

Reporting by Shruti Sonal in Bengaluru Editing by Robert Birsel

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