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National

Govt tidies up reportable super rules
27 May 2011
The Federal Government has moved to tidy up the reportable superannuation rules relating to people receiving government financial assistance, with the introduction to the Parliament this week of legislation amending the definition of reportable employer superannuation contributions (RESC). The amendment would apply retrospectively back to July 2009. More...

Streamlining Disability Insurance Deductions through Superannuation
26 May 2011
Superannuation funds will be able to streamline the way they claim tax deductions for the cost of total and permanent disability (TPD) insurance provided to fund members, following the introduction of amendments contained in the Tax Laws Amendment (2011 Measures No. 4) Bill 2011. More...

Government Clarifies Reportable Employer Superannuation Contributions Definition
26 May 2011
Australians receiving government financial assistance will no longer need to worry that additional superannuation contributions, prescribed by law or the rules of their super fund, will be considered when determining their eligibility to receive that financial assistance, with an amendment to the definition of reportable employer superannuation contributions (RESC). More...

$3bn loophole in commissions fix
26 May 2011
The federal government has left a $3 billion loophole in financial planning reforms in an apparent breach of its promise of a ‘’broad-based ban’’ on product-based commissions. The loophole - a boon to the big banks that dominate the wholesale superannuation market - allows fund managers to continue to make volume-based payments to the owners of investment ‘’platforms’’. More...

Court approves $29 million Fincorp class action
23 May 2011
The Federal Court has approved a $29 million class action settlement negotiated by a law firm on behalf of more than 5000 investors who lost money when Fincorp Investments collapsed in 2007. It also represented the first time that unsecured investors recovered any money since the collapse of Fincorp. More...

ASIC bans WA financial adviser
26 May 2011
ASIC has permanently banned financial adviser, Todd Michael King, of Perth, after an investigation found he engaged in misleading and deceptive conduct. ASIC also found that Mr King operated managed discretionary accounts in contravention of ASANDAS’ Australian financial services (AFS) licence and in contravention of section 911B(1) of the Act. More...

Court cautions directors against relying on brokers for insurance advice
23 May 2011
A recent NSW Supreme Court case has highlighted that directors should not rely solely on the advice of insurance brokers when choosing appropriate insurance cover for their organisations. The Court found that an insurance broker who provided incorrect advice to the director of a firm of financial planners, in the course of arranging professional indemnity cover for the firm, had breached his duty of care. More...

Court approves $29 million Fincorp class action
23 May 2011
The Federal Court has approved a $29 million class action settlement negotiated on behalf of more than 5000 investors who lost money when Fincorp Investments collapsed in 2007. Compensation was pursued for investors from Sandhurst Trustees, the appointed trustees of Fincorp, with allegations Sandhurst had breached its duties as trustee for investors under the Corporations Act. More...

Timbercorp trio face the music
23 May 2011
Failed agribusiness Timbercorp’s former directors must face a class-action suit filed against them in 2009 by more than 2000 investors in the Supreme Court. The investors have made allegations of conflicts of interest, breaches of directors’ duties, misleading conduct and other violations of the Corporations Act following the collapse of the company which went into voluntary administration in 2009 with a net debt of more than $900 million. More...

RE independence a must: Equity Trustees
24 May 2011
Investment funds’ responsible entities (RE) must operate independently of fund promoters, Equity Trustees’ head of funds management and institutional sales claims. Some investors in the fund have formed the PIF action group, which tried - and failed - to convince ASIC to remove Brisbane-based fund manager Wellington Capital. Investors have alleged Wellington Capital’s $7.55 million share placement may have breached the Corporations Act. More...

Financial misconduct report prompts calls for compulsory compensation scheme
20 May 2011
Bad advice, fraud, misleading information and deceptive conduct are causing “catastrophic” losses for investors and their families, the government’s investment watchdog has found. The main findings included most investors who lose money in managed investment schemes or through a financial planner’s misconduct are never fully compensated. More...

Government releases new rules for SMSF collectibles
19 May 2011
The Minister for Financial Services and Superannuation, Bill Shorten, has released draft regulations outlining tightening rules around how collectables are stored and valued. Changes include new rules prohibiting the leasing of assets to related parties, the use of assets by related parties or the storage of collectables in the private residences of related parties. More...

FoFA creates confusing commissions double standard
19 May 2011
The Financial Planning Association (FPA) has called on the Federal Government to reconsider its proposed ban on life insurance commissions within superannuation saying it is not in the public’s best interest and concerned by a double standard that has come to light in the detail of the recent Future. More...

Survey of the non-bank lending and finance sector 
17 May 2011
In October 2010, AUSTRAC concluded a survey of the non-bank lending and finance sector. The survey gathered information about the capacity of entities in the sector to identify and submit suspicious matter reports to AUSTRAC. The survey results, including a range of key findings, have been compiled into a concise report. More... 

Second Fincorp director not guilty
18 May 2011
Quigley, the former finance director of Fincorp Investments, was found not guilty of breaching his duties as a company director after facing one charge of dishonestly signing a cheque for $1,980,000 with the intention of gaining an advantage for himself and others. The charge said Quigley’s action was an abuse of his position as a company director an in breach of the Corporations Act. More...

ASIC forced to provide Count, AMP documents
19 May 2011
ASIC has been ordered to provide documents in relation to five dealer groups, including AMP Financial Planning and Count Financial, as part of a renewed legal battle with failed financial services group Chapel Road. More...

ASIC declines to act so investors move to sack fund manager
19 May 2011
ASIC has informed PIF Action Group that it would not take any action. The MFS-founded Premium Income Fund have formally taken steps to remove the manager controversially appointed to the billion-dollar fund just before the collapse of MFS. The investors failed to get the securities regulator interested in allegations that the manager, Wellington Capital, may have breached the Corporations Act. More...

Lehman investors in Australia and NZ to share in $100m
17 May 2011
More than 1000 Australian and New Zealand retail investors who bought Lehman Brothers-backed Mahogany Capital notes will receive $100 million of their $150m in investments in a settlement reached by the Perpetual Trustee Company. More...

Knowledge of compensation avenues lacking
20 May 2011
ASIC has urged dealer groups to have proper complaint handling systems in place, after research found investors had little knowledge of the existing avenues of compensation. The regulator commissioned Susan Bell Research to conduct a study of the social impact investors experienced when they are not being fully compensated after licensee’s misconduct. More...

ASIC Consultation Paper 154: Infrastructure entities - Improving disclosure for retail investors
Infrastructure Partnerships Australia, 18 May 2011

IPA has responded to ASIC’s Consultation Paper 154. The IPA supports any measures that would facilitate a greater investment in infrastructure, but claims the proposed disclosure measures unfairly single out infrastructure entities and, if deemed necessary, should apply to a wider range of entities. More...

Practice Notes

ASIC Markets Disciplinary Panel practices and procedures guide
26 May 2011
ASIC today published the operational framework for its Markets Disciplinary Panel to abide by when conducting proceedings into alleged breaches of the market integrity rules. The release of this guidance is for people and their advisers who may find themselves involved with the Markets Disciplinary Panel, and those interested in our operations generally. More...

Feedback: New guidance proposed for takeover acquisitions approved by members
Consultation Paper 159 Acquisitions approved by members: update to RG 74 (CP159) details ASIC’s plans to update guidance on the takeovers exception for acquisitions approved by members set out in item 7 of s611 of the Corporations Act 2001.ASIC is seeking comments on the proposed update to RG 74 by 1 August 2011 and plans to publish a final guide by the end of the year. More...

Forfeiture of superannuation proceeds of crime
23 May 2011
Treasury has released exposure draft regulations that would amend operating standards in the Superannuation Industry (Supervision) Regulations 1994 and the Retirement Savings Accounts Regulations 1997 to allow superannuation trustees and Retirement Savings Account providers to recognise Commonwealth, State and Territory forfeiture orders for the proceeds of crime and would allow the confiscation of superannuation funded directly with the proceeds of crime. More...

APRA finalises enhancements to Basel II Framework
3 May 2011
The Australian Prudential Regulation Authority (APRA) has released amendments to relevant prudential standards, prudential practice guides (PPGs) and reporting forms to give effect to enhancements to the Basel II Framework in Australia. The amended prudential standards, PPGs and reporting forms will come into effect on 1 January 2012. More...

Redrafted EFT Code released
22 May 2011
ASIC has released a redrafted Electronic Funds Transfer Code of Conduct (to be renamed the EPayments Code) for comment on drafting issues. The redrafted Code incorporates changes made as a result of the recent review of the Code. ASIC is not consulting on policy issues relating to the Code.

ASIC proposes to allow a 12-month transition period to the commencement of the revised Code. More...

Draft Rules for SMSF Investment in Collectables and Personal Use Assets
Released draft regulations outlining rules for self managed superannuation fund (SMSF) investment in collectables and personal use assets are set to commence on 1 July 2011. These draft Regulations implement an election commitment to allow SMSF trustees to continue to invest in collectables, subject to tighter rules as to how they are stored and valued. Details on these reforms, as well as the draft Regulations and associated explanatory material, is available at www.superstrong.treasury.gov.au. More...

ASIC research on the impacts of misconduct
19 May 2011
ASIC has published research on the social impact of misconduct in the financial services industry, giving examples of misconduct leading to financial losses conducted by Susan Bell Research. Download a copy of Report 240 Compensation for retail investors: the social impact of monetary loss (REP 240). More...

Australians urged to ‘Ask an Expert’ for financial advice
The Financial Planning Association (FPA) has launched its “Ask an Expert online financial advice The website is atwww.goodadvice.com.au

The new regulatory landscape
18 May 2011
ASIC has published a report containing the papers and discussions at its Summer School held in March 2011. The useful report contains papers on corporate governance, market integrity and competition, the future of financial advice, protection of retail investors and consumers, Australia’s new consumer credit framework and issues for SMEs. More.

Legislation

Commonwealth

Tax Laws Amendment (2011 Measures No. 4) Bill 2011
This allows the percentage of certain TPD insurance premiums that can be claimed as deductions by superannuation funds to be specified in regulations. These changes will apply from the 2011-12 income year. More...

Australian Transaction Reports and Analysis Centre Supervisory Cost Recovery Levy Bill 2011
16 May 2011
A Bill for an Act to impose a levy on persons regulated by the Australian Transaction Reports and Analysis Centre, and for related purposes. More...

Cases

Harrison v Sandhurst Trustees Ltd [2011] FCA 541
On 20 May 2011 the Federal Court approved the settlement of the Class Action. Under the settlement:

(a) Sandhurst shall pay up to $29 million (inclusive of costs and interest) to Slater & Gordon to be distributed among group members who have not opted out of the proceeding;

(b) the amount available for distribution to the Applicants and to group members in respect of Eligible Notes under the settlement after payment of approved legal costs to Slater & Gordon will be referred to as the “Settlement Fund”;

(e) the approved legal costs of up to $1.9 million include the amount proposed to be paid to Slater & Gordon for administering the Scheme.
More....

Fletcher and Barnet, in the matter of Octaviar Limited (Receivers and Managers Appointed) (In Liq) and Octaviar Administration Pty Ltd (In Liq) (No 3) [2011] FCA 494
PRACTICE AND PROCEDURE – interlocutory application to vary non-disclosure order made under s 50 Federal Court Act – application made in contemplation of litigation instituted by liquidators – non-disclosure order made on application of liquidators in exercise of powers under s 477 Corporations Act – application to vary non-disclosure order made by defendant in contemplated litigation – requirements of s 50 – order must be ‘necessary’ to prevent prejudice to administration of justice – disclosure has potential to compromise litigation – order necessary for administration of justice. More...

AvSuper Pty Limited v Commonwealth Managed Investments Limited (No. 2) [2011] NSWSC 427
PROCEDURE - costs - application to vary costs order - trust dispute - whether costs should be paid out of trust fund - where trust a vehicle for commercial investment and litigation commercial dispute - no reason that costs should not follow the event - application to vary costs order dismissed. More...

Contacts

Jenny Willcocks, Partner
Superannuation & Funds Management
T: +61 (0)3 9321 9909
E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Paul Faure, Partner
Superannuation & Funds Management
T: +61 (0)3 9321 9904
E: This e-mail address is being protected from spambots. You need JavaScript enabled to view it

Disclaimer
The information in this publication is of a general nature and is not intended to address the circumstances of any particular individual or entity. Although we endeavour to provide accurate and timely information, we do not guarantee that the information in this newsletter is accurate at the date it is received or that it will continue to be accurate in the future.