Fund Product, Company and Regulatory Updates as at 26 March 2019
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Product Updates
Sunsuper rolls out new online services for advisers
Sunsuper has enhanced its Adviser Online services, now allowing digital transactions on behalf of clients, and introducing a new member application request that compacts five regular paper forms into one smart form. The service was originally launched in 2016.
Perpetual launches credit income trust
A new initial public offer for the Perpetual Credit Income Trust has been announced, offering exposure to an actively managed portfolio of typically 50-100 credit and fixed income assets diversified by asset type, credit quality, loan maturity, country and issuer. The trust is targeting a total return of the RBA Cash Rate plus 3.25 per cent per annum, aiming for a monthly cash distribution to unit holders.
Macquarie no longer offering SMSF residential home loans
Macquarie Bank has announced it will no longer be offering self-managed superannuation fund residential home loans or family guarantee loans as of April 30. Existing clients will still be serviced. Regulatory concerns and falling property prices have seen several institutions remove these types of loans from their books, including National Australia Bank, AMP, Westpac and Commonwealth Bank.
Hostplus partners with Flexstone Partners on private equity emerging managers program in USA
Industry super fund Hostplus is setting up an arrangement with private investments firm, Flexstone Partners, to create a dedicated Hostplus program. The program is designed to provide risk-adjusted investment solutions to qualifying Hostplus members. Flexstone Partners will invest, on behalf of the fund, in the first, second or third funds of US mid-market private equity managers over three years.
MyNorth fees dropped
AMP has announced an administration fee reduction for MyNorth platform users of 0.10 per cent for the Select menu and 0.20 per cent for the Choice menu. Administration fee caps have also been reduced for individuals and families, with families now able to include up to six members, as opposed to the former cap of four members. MyNorth index investment management fees have also been lowered by 0.10 per cent annually. Over 85,000 customers currently use MyNorth.
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Company Updates
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Regulatory Updates
Quinn Emanuel launches shareholder class action against IOOF
The intention to launch a class action has been announced against IOOF by Quinn Emanuel Urquhart & Sullivan lawyers on behalf of investors who bought company shares between 27 May 2015 and 6 December 2018. The litigation funder is the Regency Group.
The class action has arisen from evidence given at the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry whereby subsidiaries of IOOF breached their duties as superannuation trustees, and that directors and officers at IOOF were all aware of those breaches. After the allegations, APRA launched legal proceedings against those subsidiaries and directors at IOOF, seeking to disqualify the directors from acting as superannuation trustees, amongst other penalties.
After APRA’s notification, the share price dropped significantly. The law firm is alleging that IOOF was well aware that the conduct would have legal and regulatory risks, and during this period, is alleged to have breached continuous disclosure obligations and engaged in misleading or deceptive conduct.
APRA may publish worst performing super funds, trustees to expect harsher treatment
APRA deputy chair Helen Rowell said at a recent conference that APRA wouldn’t disclose which of the 28 underperforming funds, since the publicity would probably cause financial penalties to members, however she did add ‘for now’. APRA is keen to make fund performance more transparent so members and potential members can see what their fund is delivering. The Members Outcome Bill, allowing APRA to take civil penalty action for breaches of obligations to members, is yet to pass in Parliament. Tough new guidelines, however, are coming into play for trustees in the future.
ASIC places Endeavour and Linchpin into liquidation
After contraventions of the Corporations Act, Endeavour Securities (Australia) Ltd and Linchpin Capital Group Ltd have been placed into liquidation. Endeavour’s registered scheme and Linchpin’s unregistered scheme, the Investport Income Opportunity Fund, has also been placed into liquidation. Endeavour and Linchpin agreed to the contraventions and the liquidation of both companies and the funds.
Endeavour was found not to have acted in the best interests of the members of the scheme, failed to provide efficient and fair financial services, did not take reasonable care and skill as a responsible entity, engaged in transactions without member approval, and failed to tell investors the nature and extent of the transactions.
Linchpin was found to be operating an unlawful managed investment scheme, did not have an Australian Financial Services licence, and engaged in conduct that was likely to mislead or deceive.
ASIC cancels first AFSLs of those failing to join AFCA
In a regulatory first, ASIC has cancelled Australian Financial Services licences of firms for failing to obtain membership of the Australian Financial Complaints Authority (AFCA) scheme, which replaced three existing schemes (Financial Ombudsman Service, Credit and Investments Ombudsman, and the Superannuation Complaints Tribunal).
The first two firms are New South Wales-based Sydney Business Accounting and A G Calleia & Co, with both licences cancelled in February 2019. Firms providing financial products or services to retail clients were required to become members by 21 September 2018.
ASIC obtains interim injunctions against Forex Capital Trading
In an attempt to protect investor funds, Forex Capital Trading, an over-the-counter derivatives issuer, ASIC has obtained an interim injunction to restrain the company from removing their assets from Australia, selling property, and to prevent the sole director, Shlomi Yoshai, from leaving the country. Monies have been frozen. ASIC sought an extension of these interim orders recently, which were declined by the court, however Yoshai cannot leave the country and the company has been forbidden from transferring any property or client money overseas.
Westpoint investors will receive $1.5 million after class action
ASIC’s class action against Westpoint Group has resulted in $1.5 million returned to investors. Over 200 former Westpoint investors moved against Brighton Hall Securities (in liquidation), led by ASIC. The claim has now been finalised, with the members’ original claim being $6.65 million, and a return of $0.22 on the dollar being recovered. This means investors have now received a return of $160-$170 million on their $388 million in losses. At its collapse, 3,000-4,000 investors were owed money from Westpoint.
