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National

NAB faces $450m disclosure claim
19 November 2010
NAB is facing a shareholder class action which is provisionally claiming losses of $450 million for the bank’s failure to disclose its exposure to sub-prime securities. More...

Senate urges transparency on coercive powers
19 November 2010
A key Senate Committee has supported legislation extending the powers of the Australian Securities and Investments Commission with respect to search warrants and telephone intercepts, but not without urging that the regulator be obliged to detail its use of such powers in its annual reports. More...

Australian Consumer Law comes one step Closer
18 November 2010
The Parliamentary Secretary to the Treasurer said that the country’s first national Australian Consumer Law has come one step closer with the publishing of regulations for the new law. The Australian Consumer Law (ACL) replaces 20 existing Federal, State and Territory laws with one national law and the ACL provides a wide range of enhanced consumer protections and will come into force from 1 January 2011. More...

Bank boss accused of deceit
18 November 2010
A lawsuit by former senior St George staffers has alleged that the bank’s former chief executive, Paul Fegan, deceived them over retention bonuses aimed at keeping them during the group’s merger with Westpac. The Federal Court in Sydney heard that the group would also be claiming Mr Fegan had breached the misleading and deceptive conduct provisions of the Trade Practices Act. More...

Merger of superannuation funds sets a $28bn record
18 November 2010
First State Super and Health Super have announced plans to join forces, in the largest merger of superannuation funds in Australia. The merger is part of a drive for consolidation as superannuation funds seek to compete on cost, offset rising administration costs, and reduce pressures from federal government reforms. More...

Productivity Commission to review default super process
18 November 2010
The Senate has asked the Productivity Commission to design a new process for the selection and ongoing review of default superannuation funds under modern awards. More...

SPAA proposes employee opt-out clause for employer superannuation guarantee
17 November 2010
The Self-Managed Super Fund Professionals’ Association of Australia is proposing a new opt-out clause for employees who can show they will breach the contribution caps on their accounts if their employers continue to distribute super payments. More...

New research shows why superannuation must be lifted to 12%
18 November 2010
A major new report on retirement intentions by industry super funds shows why the superannuation guarantee must be lifted from its current rate of 9% of wages to the more sustainable figure of 12%, as the Federal Government has proposed. More...

Confusion reigns for policy definitions
18 November 2010
Conflicting opinions have emerged within the financial services industry about the concept of introducing standard definitions of critical illnesses for Australian life insurance products. The key disagreement relates to who is responsible for creating a better understanding among clients about insurance policy features — insurers or advisers. More...

Reappointment of Mr Roger Corbett AO to the Reserve Bank of Australia Board
18 November 2010
Mr Roger Corbett AO has been reappointed as a member of the Reserve Bank of Australia Board (RBA Board) for a further five-year period commencing 2 December. More...

OECD Economic Outlook for November 2010
18 November 2010
The OECD Economic Outlook confirms Australia’s economy continues to be one of the best performing in the developed world with enviable growth and unemployment forecasts. The growth outlook for Australia is one of the report’s strongest at 3.3 per cent in 2010 and 3.6 per cent in 2011. More...

Boom in executive remuneration means CEO’s earning almost 100 times average workers
17 November 2010
A new analysis of remuneration at Australia’s 50 largest companies reveals the typical CEO is taking home almost 100 times that of the average worker. The analysis of CEO remuneration at companies listed on the ASX/S&P 50 Index, shows that the gap is widening between what CEO’s personally earn and what they pay their employees. More...

Investment scammer sentenced
18 November 2010
Queensland-based Melanie Miller has been sentenced to six months imprisonment for her involvement in an international investment scam which raised almost $7 million from Australian investors. Following an ASIC investigation, Miller was charged with one count of providing financial advice without an Australian financial services licence under s911A of the Corporations Act. More...

ASIC ramps up its campaign to highlight the risks to retail investors in Contracts for Difference
18 November 2010
ASIC commissioner Greg Medcraft, in a clear reference to the June collapse of Melbourne financial group Sonray, freezing about 3000 accounts, said that CFDs were “a product that’s so complex, with so much scope for substantial loss” that they should not be advertised to a non-specialised audience. About 10 per cent of the CFDs sold in Australia went into self-managed super funds (SMSFs). More...

APRA advises bodies to consult on outsourcing services
16 November 2010
The Australian Prudential Regulation Authority has advised all authorised deposit-taking institutions (ADIs), friendly societies, general insurers, life insurers and superannuation trustees to be aware of the need for proper risk and governance processes for all outsourcing and off-shoring arrangements, including cloud computing. More...

Inactive superannuation funds to be taken by Government
16 November 2010
Over $13 billion in inactive or lost superannuation fund accounts may be taken by the federal government unless claimed by owners. Laws were introduced last year so that in October 2010 the government will begin transferring inactive superannuation fund accounts into consolidated revenue. It is estimated that the government will gain around $10 billion over the next five years. More...

ATO backs Cooper SMSF initiatives
16 November 2010
The ATO has thrown its support behind a number of recommendations contained in the Cooper Review designed to tighten up rollover arrangements between APRA registered funds and self-managed superannuation funds (SMSFs), including the use of Tax File Numbers and bank account numbers. The ATO was also providing clearer information to APRA funds via Super Fund Lookup. More...

Cost of funds increasing for banks: Reserve Bank Board’s Monetary Policy Meeting
16 November 2010
The Australian Bankers’ Association minutes from the Reserve Bank Board’s Monetary Policy meeting confirm that the cost of banks’ funding has increased beyond the official cash rate. This is consistent with the industry’s statements on why home loan interest rates have moved by more than the Reserve Bank’s cash rate, for the first time in almost a year. More...

Former property developer agrees to EU
12 November 2010
ASIC has accepted an enforceable undertaking (EU) from a former Gold Coast property developer resulting in a 10 year ban from the financial services industry. ASIC accepted the EU as an alternative to pursuing an administrative banning of Percival under section 920A the Corporations Act. More...

ATO reveals nearly 400 taxpayers convicted in September quarter
12 November 2010
Nearly 400 people were convicted in the September quarter for tax and superannuation offences, the Australian Taxation Office has revealed, warning that business owners must lodge their appropriate statements or risk harsh penalties often running into the thousands of dollars. More...

Anti-inflationary and economic growth tool
11 November 2010
The multi-faceted role of superannuation in Australia has been highlighted by the Financial Services Minister. The Minister for Superannuation Bill Shorten has emphasised the critical role super plays in the health of the Australian economy in addition to its retirement savings purposes. More...

ASIC issues mortgage guidelines
10 October 2010
ASIC has released a set of guidance clauses for mortgage lenders, but they are still powerless to stop banks raising interest rates above those set by the Reserve Bank. Professor Ian Ramsay, the director of the Centre for Corporate Law and Securities Regulation said what is unknown is whether some mortgage providers which have simply viewed exit fees as a profit centre, which is illegal, will seek to increase fees elsewhere. More...

Cooper: proposed next steps for industry-wide data standards
11 November 2010
Jeremy Cooper told delegates at the ASFA National Conference of a number of recommendations he would include in his report to the swimEC Council shortly, aimed to achieve the adoption of mandatory, common data standards for superannuation transactions. His final report to the swimEC Council, a body established in 2002 to create industry standards, would recommend a co-regulatory model – a joint effort of industry, government and the regulators. More...

ASIC bans Melbourne client adviser for market manipulation
10 November 2010
Melbourne-based adviser Lim Theam Chye has been banned from providing financial services.

The ban follows concerns that Lim had engaged in market manipulation by arranging a crossing transaction on the Australian Securities Exchange (ASX) in the shares of Wintech Group (WTG) on 23 June 2009.More...

Articles

Retirement savings and longevity
Author: Dr Sacha Vidler 
Source: ISN Research Report, Released November 2010; 24pp
The Report found that more than one third of retirees said they only had enough superannuation savings to make ends meet or actually had insufficient superannuation to make ends meet. More...

Compensation for indirect expropriation in international investment agreements
8 November 2010
Author: Emma Aisbett, Larry Karp, and Carol McAusland
Source: Canberra: Centre for Economics Policy Research: 08 November 2010
This paper discusses one of the more contentious elements of International investment agreements; the compensation claims allowed when investors are hurt by new regulations addressing environmental or other social concerns. More...

Practice Notes

Discussion Paper: Improving the operation of the anti-avoidance provisions in the income tax law
18 November 2010
The Assistant Treasurer releases a discussion paper titled Improving the operation of the anti-avoidance provisions in the income tax law. The discussion paper considers ways to consolidate, streamline and improve the operation of the anti-avoidance provisions.Interested parties are invited to comment on the paper with the closing date for submissions: Friday, 18 February 2011. More...

ASIC releases updated guidance on administrative powers for financial services enforcement
18 November 2010
ASIC releases updated guidance on how it will use its administrative powers to enforce the financial services legislation, including its new markets supervisory powers. More....

ASIC issues report on relief decisions 1 December 2009 to 31 May 2010
17 November 2010
ASIC releases a report outlining decisions on relief applications which aims to improve the level of transparency and the quality of information available about decisions ASIC makes when asked to exercise discretionary powers to grant relief from provisions of the Corporations Act, National Credit Act or the Transitional Act. More... Overview of decisions on relief applications (December 2009 to May 2010) (REP 217)

ASIC takes action to help investors understand OTC CFDs
17 November 2010
ASIC has released a consultation paper setting out ways for issuers to improve product disclosure for people investing in over-the-counter contracts for difference (CFDs). Consultation Paper 146 Over-the-counter contracts for difference: Improving disclosure for retail investors (CP 146), which includes a draft regulatory guide (RG), proposes an ASIC benchmark-based disclosure model for OTC CFDs. Submissions for the consultation paper must be provided to ASIC by 21 December 2010. More...

Small Business Superannuation Clearing House website
The Small Business Superannuation Clearing House offers small businesses with less than 20 employees a free online service for simplifying staff superannuation payments. Once registered, eligible businesses only have to enter their employees’ details once to start making payments. The service stores your details and keeps a record of your payments. To register, or to find more information on the free service, see the website.

ASIC sets out expectations of lender practices on mortgage early termination fees
ASIC has released guidance for mortgage lenders that sets out how provisions in the National Credit Code and unfair contract terms law apply to mortgage early termination fees (exit fees).
This follows consultation leading up to and after the 1 July 2010 start date for the new legislation. Regulatory Guide 220 Early termination fees for residential loans: unconscionable fees and unfair contract terms. More....

ASIC releases guidance to improve margin lending disclosure
ASIC has released regulatory guidance which aims to improve protections for retail clients through better disclosure of non-standard margin lending facilities.
RG 219 Non-standard margin lending facilities: Disclosure to investors outlines the information that ASIC expects a provider to include in a Product Disclosure Statement (PDS) for a non-standard margin lending facility. More...

ASIC releases guidance on administrative powers to enforce credit legislation
ASIC has released new regulatory guidance to help the credit industry better understand ASIC’s administrative powers to enforce the new consumer credit legislation.
Regulatory Guide 218 Licensing: Administrative action against persons engaging in credit activities (RG 218) describes the administrative powers that are available to ASIC to enforce the new legislation. Such powers include, for example, - suspending or cancelling a credit licence, banning a person from engaging in credit activities, or varying or imposing conditions on a licence. More...

Legislation

Commonwealth

Corporations Amendment (No. 1) Bill 2010
Source: Canberra: Senate - Standing Committee: Report tabled 16 November 2010
The Bill was re-intoduced on 29 September 2010 with no substantive changes. The Bill propses to amend certain legislation in relation to: how people access information on company registers; market offences and ASIC powers to investigate those offences, and clarification of how long unsolicited offers made to purchase financial products off-market must remain open. More...

Contact Details

Melbourne

Jenny Willcocks
Partner
Superannuation & Funds Management
T: +61 (0)3 9321 9909
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Paul Faure
Partner
Superannuation & Funds Management
T: +61 (0)3 9321 9904
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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.