Colonial First State

Colonial First State (CFS) is an Australian wealth management group focused on superannuation, investment management and retirement income products. Its customers include individual investors, employers, corporate clients and superannuation fund investors. The business operates across the accumulation and retirement stages of the financial life cycle, offering investment choices and administration services through products and platforms such as FirstChoice and CFS Edge. The business originated in 1988, when the State Bank of New South Wales established First State Fund Management as a subsidiary. Its corporate identity changed as ownership of the banking businesses around it evolved. In 1994, Colonial Mutual acquired the State Bank of New South Wales from the New South Wales Government. Following the subsequent integration, the merged organisation adopted the Colonial State Bank name in September 1996, while First State Fund Management was branded Colonial First State. CFS demutualised in 1997 and was acquired by Commonwealth Bank of Australia in 2000. The Colonial State Bank division was later incorporated into Commonwealth Bank, while CFS continued as a wealth management business. A major structural change occurred after Commonwealth Bank announced in 2020 that it intended to sell a majority interest in CFS to global investment firm KKR, subject to regulatory approvals. The transaction was completed in November 2021, and CFS became a standalone company on 1 December 2021. The separation changed the business from a wholly owned Commonwealth Bank division into an independently operated wealth management company with KKR as majority investor and Commonwealth Bank retaining a minority interest. CFS's business scope includes superannuation products, investment platforms, managed investments and retirement income solutions. Its offerings are distributed through financial advisers and other channels, and its products may provide access to diversified portfolios, shares, fixed income, property, infrastructure and other asset classes through external and internal investment managers. FirstChoice is one of its principal superannuation and investment platforms, while CFS Edge is an adviser-oriented platform offering administration and investment functionality. The company has also made public commitments concerning responsible investment and climate change. CFS has stated that it intends to align its approach with the objectives of the Paris Agreement, target net-zero emissions by 2050 and reduce greenhouse-gas emissions from its investment portfolios by 30 percent from 2019 levels. These commitments concern the investment portfolios and form part of the group's broader response to climate-related financial risks. CFS has faced regulatory and litigation scrutiny over the treatment of superannuation members and the relationship between product distribution and remuneration. In 2021, the Federal Court imposed a $20 million penalty after finding that CFS had misled members about the need to provide investment directions following legislative changes. The company also paid $67 million to remediate losses affecting 5,815 members. Separate proceedings concerning alleged conflicted remuneration were ultimately unsuccessful for the regulator after the Federal Court dismissed ASIC's case and later dismissed ASIC's appeal. CFS subsequently reached settlements in two class actions concerning default superannuation transfers and adviser-related fees; the settlements were made without admissions of liability or wrongdoing.

Colonial First State traces its origins to 1988, when the State Bank of New South Wales created First State Fund Management as a subsidiary. The new business was established to manage investment activities and develop wealth-management capabilities alongside the bank's broader financial services operations. The ownership and branding context changed in the following decade. In 1994, Colonial Mutual acquired the State Bank of New South Wales from the New South Wales Government. After the relevant banking businesses were combined, the organisation was rebranded Colonial State Bank on 23 September 1996. First State Fund Management adopted the Colonial First State name, creating the brand used for the wealth management business. CFS subsequently demutualised in 1997. In 2000, Commonwealth Bank of Australia acquired Colonial. The Colonial State Bank division was merged into Commonwealth Bank, while Colonial First State became part of the group's wealth management operations. Over the following years, the business developed a portfolio of superannuation, investment and retirement products for individual investors, employers, advisers, corporate clients and superannuation funds. The FirstChoice platform became a significant part of its product architecture, providing superannuation and investment administration, while CFS Edge served adviser and platform functions. The next major turning point came in May 2020, when Commonwealth Bank announced its intention to sell a 55 percent interest in CFS to KKR. The proposed transaction required approval from the Australian Prudential Regulation Authority and the Foreign Investment Review Board. Completion took place in November 2021. On 1 December 2021, CFS became a standalone company, ending its status as a wholly owned operating division of Commonwealth Bank while leaving Commonwealth Bank with a minority ownership interest. CFS's modern business is centred on wealth accumulation and retirement. Its products give customers access to superannuation structures, managed investments, investment choices and retirement income arrangements. The business generally operates through adviser, employer and institutional channels as well as direct relationships associated with its platforms. Its investment proposition can involve multiple asset classes and investment managers rather than a single proprietary portfolio. The company has also been subject to regulatory enforcement and civil litigation. In 2021, the Federal Court imposed a $20 million penalty after finding that CFS had made misleading statements to members about the effect of legislative changes and whether members needed to give an investment direction to stay in the FirstChoice Fund. The company paid $67 million in remediation to 5,815 members. ASIC separately pursued proceedings concerning alleged conflicted remuneration connected with the distribution of a CFS superannuation product; the Federal Court dismissed the case in 2022 and dismissed ASIC's appeal in 2023. CFS also settled class actions in 2022 and 2023 concerning default superannuation transfers and adviser-related fees, without admitting liability or wrongdoing. CFS has publicly stated climate-related objectives for its investment portfolios. These include alignment with the Paris Agreement, a net-zero emissions ambition by 2050 and a 30 percent reduction in portfolio greenhouse-gas emissions from 2019 levels. The commitments form part of the company's positioning as a contemporary Australian wealth manager operating in a heavily regulated superannuation and retirement market.

1. 2021CFS became standalone

   The KKR transaction was completed in November, and CFS began operating as a standalone company on 1 December.

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2. 2020Proposed majority sale to KKR announced

   Commonwealth Bank announced plans to sell a 55 percent interest in CFS to KKR, subject to regulatory and foreign-investment approvals.

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3. 2000Commonwealth Bank acquired Colonial

   Commonwealth Bank acquired Colonial, bringing CFS into the Commonwealth Bank group.

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4. 1997CFS demutualised

   Colonial First State completed its demutualisation.

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5. 1996Colonial First State brand adopted

   Following the creation of Colonial State Bank, First State Fund Management was branded Colonial First State.

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6. 1994Colonial Mutual acquired the State Bank of New South Wales

   Colonial Mutual acquired the State Bank of New South Wales from the New South Wales Government, setting the stage for the later Colonial First State branding.

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7. 1988First State Fund Management established

   The State Bank of New South Wales established First State Fund Management as a subsidiary, providing the organisational origin of Colonial First State.

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An Australian wealth management provider serving retail, adviser, corporate and superannuation-fund markets, with a broad focus on investment administration, superannuation accumulation and retirement income.

• FirstChoiceSuperannuation and investment platform

  FirstChoice is a major CFS platform for superannuation and investment administration. It provides members and investors with access to investment options and structures designed for accumulation, while also supporting adviser and employer distribution. The platform has been central to CFS's retail and workplace wealth-management proposition.

• CFS EdgeAdviser investment platform

  CFS Edge is an investment and administration platform oriented toward financial advisers and their clients. It supports portfolio administration and access to investment choices within CFS's broader wealth-management offering.

• Retirement income solutionsRetirement product

  CFS provides retirement-oriented products intended to help superannuation members convert accumulated savings into income during retirement. The offering sits alongside its accumulation products and investment platforms.

• 2020Commonwealth Bank agreed to sell a majority interest to KKRM&A

  Commonwealth Bank sought to separate CFS from its banking operations while retaining a minority interest in the wealth-management business.

  What changed. It announced the proposed sale of a 55 percent stake to KKR, subject to approval by relevant Australian authorities.

  Aftermath. The transaction completed in November 2021, and CFS became a standalone company on 1 December 2021.

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• Climate and portfolio-emissions commitmentStrategy

  CFS identified climate change and the emissions profile of investment portfolios as strategic issues for its wealth-management business.

  What changed. The company committed to alignment with the Paris Agreement, net-zero emissions by 2050 and a 30 percent reduction in investment-portfolio greenhouse-gas emissions from 2019 levels.

  Aftermath. The commitments established long-term climate objectives for the business and its investment portfolios.

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• 2023Adviser-fee class-action settlementControversy

  CFS settled a $100 million class action alleging that fees charged to superannuation members were increased to support continuing adviser commissions. The settlement included no admission of liability or wrongdoing.

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• 2022ASIC conflicted-remuneration proceedings dismissedControversy

  ASIC's proceedings concerning alleged conflicted remuneration paid by CFS to Commonwealth Bank for distributing a CFS superannuation product were dismissed by the Federal Court. The regulator's appeal was dismissed in 2023.

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• 2022Default superannuation transfer class-action settlementControversy

  CFS settled a $56.3 million class action alleging delays in transferring beneficiaries' accrued default amounts to a MySuper product. The settlement included no admission of liability or wrongdoing.

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• 2021Misleading superannuation member communicationsControversy

  The Federal Court found that CFS had misled members about whether legislative changes required them to provide an investment direction to remain in the FirstChoice Fund. CFS was fined $20 million and paid $67 million in remediation to 5,815 members.

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• 2021CFS became a standalone company after the KKR transaction

  The sale of a majority interest to KKR was completed in November 2021, and Colonial First State began operating as a standalone company on 1 December 2021.

  M&A
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• 2020Commonwealth Bank announced the proposed sale of a majority stake in CFS to KKR

  Commonwealth Bank announced that it planned to sell a 55 percent interest in Colonial First State to KKR, subject to approval by Australian regulators and the Foreign Investment Review Board.

  M&A
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• CFS committed to climate and portfolio-emissions targets

  CFS announced commitments to align with the goals of the Paris Agreement, achieve net-zero emissions by 2050 and reduce greenhouse-gas emissions from its investment portfolios by 30 percent from 2019 levels.

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1. Colonial First State
2. Colonial First State official website