Commonwealth makes good on unit price errors

Investors in the Commonwealth SuperSelect and Commonwealth Personal Super & Rollover plans have just received glossy documents informing them of unit pricing errors first identified in 2004.

The documents, produced in response to an ASIC enforceable undertaking in 2005 and endorsed by an external compliance consultant, were sent during June/July after unit prices had already been adjusted in the affected investment options. In most cases the unit price of an option was adjusted downward, by as much as 1.24 per cent in the Commonwealth SuperSelect Shares option, and the Q&A section at the back of the document even anticipates the query “Why has my account balance gone down?”. The producers of the document, Commonwealth subsidiary CMLA, answer that while the adjustment may have “appeared to have de-valued your investment, it is in fact re-setting it from an artificially inflated value to its correct value.” The inaccurate unit prices are ascribed in the document to a variety of errors within Commonwealth’s internal investment administration system, occurring between 2000 and 2004.. These include taxes not being re-aligned correctly at the end of relevant financial years, discounting not being applied when calculating future tax liabilities, incorrect tax rates being applied to unit prices of some options, management fees not being rebated correctly in some options, and buy/sell spreads being too high in one of the affected options. Commonwealth operations staff were not immediately available to discuss the scope of the unit price adjustments which have just taken place, or outline how internal processes have changed to protect against future errors.