Colonial First State
| Company type | Private |
|---|---|
| Industry | Wealth management, Investment management, Superannuation |
| Predecessor | First State Fund Management |
| Founded | 1988 |
| Headquarters | Sydney , Australia |
| Products | Investment, superannuation, retirement solutions |
| Owner | Kohlberg Kravis Roberts (majority stake since 2021) |
| Parent | None (independent since December 2021) |
| Website | www |
Colonial First State (CFS) is a prominent Australian wealth management firm that provides investment, superannuation, and retirement solutions tailored for individual investors, corporations, and superannuation funds.
History
Initially established in 1988 as First State Fund Management under the State Bank of New South Wales, the company experienced notable transformation following the acquisition of the State Bank by Colonial Mutual in 1994. By 1996, the combined organization was renamed Colonial State Bank, and First State Fund Management adopted the name "Colonial First State" (CFS). After demutualising in 1997, CFS was acquired by Commonwealth Bank in 2000, which subsequently integrated Colonial State Bank into its broader operations.
In May 2020, Commonwealth Bank revealed intentions to divest a 55% ownership interest in CFS to Kohlberg Kravis Roberts (KKR), pending regulatory consent. This transaction finalized in November 2021, resulting in CFS operating as an independent entity from December 2021 onward.
CFS has pledged to support climate initiatives consistent with the Paris Agreement, aiming to achieve net zero carbon emissions by 2050 and to reduce greenhouse gas emissions across its investment portfolios by 30% relative to 2019 levels.
Controversies
In 2020, the Australian Securities and Investments Commission (ASIC) commenced proceedings against both Commonwealth Bank and CFS, alleging $22 million in conflicted remuneration paid by CFS to Commonwealth Bank linked to distribution of a superannuation product issued by CFS. The Federal Court of Australia dismissed these claims in 2022 and upheld this decision upon ASIC’s appeal in 2023.
The Federal Court of Australia imposed a $20 million penalty on CFS in 2021 for providing misleading information to superannuation members. This ruling resulted in a $67 million remediation payout benefiting 5,815 members. The court determined that CFS falsely informed members that legislative amendments required them to submit investment instructions to remain within the FirstChoice Fund and failed to disclose that contributions would automatically transfer to a MySuper product if no such instructions were given.
In 2022, CFS resolved a $56.3 million class action brought by Maurice Blackburn concerning delays in transferring beneficiaries’ accrued default balances into a MySuper product. The settlement was reached without any admission of liability or wrongdoing from CFS.
In 2023, CFS settled another $100 million class action with Slater & Gordon regarding accusations of increasing fees on superannuation members to finance commissions for financial advisers. This agreement also included no admission of fault or misconduct by CFS.