Managed investment unit pricing

ASIC has accepted an enforceable undertaking from The Colonial Mutual
Life Assurance Society Limited (CMLA), Colonial Mutual Superannuation
Pty Limited (CMS) and Commonwealth Custodial Services Limited (CCSL).

The undertaking follows the identification by CMLA,
CMS and CCSL of some irregularities with unit-linked investment options
offered by CMLA, CMS or CCSL, and managed by CMLA.

CMLA, CMS and CCSL advised ASIC that some unit
prices in the unit-linked investment options managed by CMLA were wrong
due to the incorrect allocation of imputation tax credits, the
incorrect treatment of tax allowances, other tax related problems, and
processing irregularities. Investors in some superannuation funds,
deposit funds, master funds and master trusts were provided with
incorrect information concerning their investments including incorrect
account balances and incorrect withdrawal amounts by CMLA or CCSL. CMS
and CCSL are approved trustees of the relevant funds and trust.

ASIC’s Executive Director of Enforcement, Ms Jan
Redfern said ASIC and CMLA, CMS and CCSL agreed to enter into an
enforceable undertaking to ensure that investors who had been affected
by the unit pricing error were returned to the same position they would
have been had the errors not occurred.

CMLA has already rectified unit prices and made restitution to investors in connection with a number of the issues.

As part of the enforceable undertaking, CMLA has
undertaken to engage an external compliance consultant, to be approved
by ASIC, to review the systems, procedures and processes established by
CMLA to ensure that similar issues do not happen again. CMLA has
undertaken to report on these requirements to ASIC

CMS and CCSL have also agreed to compensate and
notify investors affected by those unit pricing issues, which have not
yet been addressed, and to report on this requirement to ASIC.

In December 2004, ASIC and APRA issued a consultation paper seeking
industry comment on proposed guidance for good practice in unit pricing.

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