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Vol.25 No.42 | November 3, 2011 | $6.95 INC GST
The publication for the personal investment professional
www.moneymanagement.com.au
NAB AND AMP RESULTS: Page 4 | ASIAN EQUITIES: Page 14
Bushby calls for super transparency By Mike Taylor THE Australian Prudential Regulation Authority’s (APRA’s) handling of superannuation funds needs to be just as transparent as its handling of the major banks, according to Tasmanian Liberal Senator David Bushby. Amid concerns expressed in the financial planning industry about the manner in which industry superannuation funds have been allowed to operate, Bushby has also suggested APRA might need dedicated and specialist teams to handle superannuation supervision. In a series of questions on notice directed to APRA, Bushby has specifically raised issues canvassed by some financial planners, including certain personalities holding multiple superannuation fund trustee directorships and how many enforcement actions it has undertaken related to flawed unit pricing and asset valuations. Speaking to Money Management, Bushby said he believed APRA had done a
David Bushby reasonable job with respect to its regulation of financial services entities, but its handling of superannuation funds was proving harder to fathom. “Their handling of superannuation funds may well be appropriate, but I believe we
need to learn more about what is happening,” he said. Bushby said that in the wake of media reports on MTAA Super and the collapse of the Trio/Astarra funds, he had asked a large number of questions of APRA during Senate estimates hearings, and believed the issues warranted further discussion. He said in recent years, both the banking sector and financial advice industry had been the subject of increased governance and conflicts of interest obligation, but no similar tightening had occurred with respect to superannuation funds. “Despite the massive amount of money being managed on behalf of Australians, superannuation funds appear to have fallen between the cracks,” Bushby said. Indicating the Federal Opposition might look to change the legislative arrangements around superannuation funds, the Tasmanian Senator said the Superannuation Industry (Supervision) Act had been in place since 1994, and had been subject to only modest change.
Executives on the move By Tim Stewart IT has been a turbulent year in the financial planning industry, with a number of executives losing their positions as the consolidation in the market continues. The biggest structural change to the industry in 2011 has been the merger of AMP and AXA Asia Pacific, which saw AXA chief executive Andrew Penn leave the company with a $17 million payout. AMP chief executive Craig Dunn acknowledged in April that the merger would result in job losses where “duplication” existed, although he said the company would endeavour to limit any staff cuts to “natural attrition”. Count Financial agreed to a takeover by the Commonwealth Bank on 29 August, in a deal worth $373 million. The acquisition represented the big banks' first foray into financial services since the consumer watchdog blocked NAB's $13.3 billion offer for AXA Asia-Pacific. More recently, the takeover of DKN Financial Group by IOOF Holdings Limited was made official in October. Five DKN board members resigned their positions as part of the agreement, and DKN chief executive Phil Butterworth left the merged entity on 21 October 2011. Following an extraordinary general meeting last month, Matrix Financial Solutions shareholders voted to put 100 per cent of the company up for sale to an external investor. Matrix managing director Rick Di Cristoforo said the plan had “significant support” from both shareholders and advisers. Snowball Group and Shadforth Financial Group joined forces in June, and will adopt the name SFG Australia (subject to shareholder approval). It has been
announced that Snowball chief executive Tony McDonald will leave the company on 4 October 2012. Zurich Financial Services sold ratings house Lonsec to Mark Carnegie-backed company Financial Research Holdings in June. One month later, Lonsec general manager of research Grant Kennaway departed the company to join Morningstar. There was also movement at ratings house Standard & Poor’s, with managing director of fund services Mark Hoven leaving on 29 July 2011. Last month former Professional Investment Holdings (PIH) chief executive Robbie Bennetts formally ended his relationship with the company he founded. PIH parent company Centrepoint Alliance chose not to continue Bennetts’ two-days-per-week consultancy work. Perpetual chief executive David Deverall completed the handover of his job to Chris Ryan on 4 March of this year. In June, Mark Burgess resigned his position as managing director of Treasury Group to take on the general manager role at the Future Fund Management Agency. Wilson HTM underwent a major reshuffle in March when chief executive David Groth resigned after a year in the role. UBS Global Asset Management finalised its takeover of ING Investment Management Australia on 4 October, leading to the redundancies of 36 of the 120 ING staff, according to one source. AMP Capital lost its head of Asian equities Karma Wilson in August, leaving Ragu Sivanesarajah and Jonathan Reoch as acting co-heads of Asian equities. Finally, the big insurer Tower Australia was acquired by Japanese insurer Dai-Ichi Life in May. Tower later rebranded as TAL.
“During this time, financial markets have dramatically changed, with more complex and less secure asset classes and products coming on stream, and there have been technology changes which make it more difficult for regulators to track investor fund movements,” Bushby said. “As such, I believe a number of questions need to be answered,” he said. Bushby said that among those questions was whether APRA’s prudential supervision strategy remained best practice, and whether its cross-functional approach remained appropriate. “Does APRA now need dedicated teams of experts who do superannuation-only supervision, and should such experts be provided additional supervisory powers?” he said. Bushby said he was also interested in whether APRA policies on unit pricing and asset valuation needed to be more aggressively enforced, and whether the regulator needed to adopt new enforcement strategies.
MIS fallout continuing for planning firms By Chris Kennedy THE fallout from a variety of managed investment schemes (MISs) that collapsed following the onset of the global financial crisis continues to play out through the Financial Ombudsman Service (FOS). In eleven decisions announced by FOS in the past three months directly relating to MISs, FOS found in favour of the complainant on ten occasions. In those cases, the financial services provider was o rd e re d t o re i m b u r s e t h e client for capital lost (capital invested less distributions received, if any) as well as interest compounded at 5 per cent per annum. In s o m e c a s e s, o t h e r expenses including management costs were also ordered to be refunded, as well as loan costs in cases where the client w a s a d v i s e d t o b o r row t o invest in the MIS. In one case, although the financial services provider was directed to repay the client, the company was in
Mark Rantall liquidation and the liquidator was not deemed to be liable. The cases involved both agribusiness and real estate MISs. Failed agribusiness projects that led to findings against financial services providers included projects from Great Southern, Timbercorp and ITC, as well as the No r t h e r n R i v e r s Co f f e e Pr o j e c t , Po r t Ro b e E s t a t e Continued on page 3