Archived News for Finance Sector Professionals - May, 2012

The ANZ bank has dropped its variable rates for mortgages and business lending by 0.37 per cent, dropping to 7.05 per cent.

The Federal Government has released draft regulations of the Government’s plans to reform and modernise the country’s insolvency framework.

The Federal Government will start paying out its new Household Assistance Payments, paying a total of $35 million to over 1.6 million Australian families over the coming months.

Recent figures released by the Australian Securities and Investments Commission (ASIC) show that insolvencies are remaining at high levels.

Federal Parliamentary Secretary to the Treasurer, Bernie Ripoll, has announced the appointment of Belinda Gibson and Ian Purchas as Members of the Financial Reporting Council (FRC).

Changes to the Australian superannuation system has sparked anger from the financial services industry.

The Australian Prudential Regulation Authority (APRA) has released a discussion paper on proposed arrangements for the authorisation of MySuper products.

Accompanying the discussion paper is a draft authorisation application form together with instructions, as well as draft Prudential Standard SPS 410 MySuper Transition (SPS 410) which sets out requirements for trustees moving member balances into a MySuper product.

On 3 November 2011, the Federal Government introduced the Superannuation Legislation Amendment (MySuper Core Provisions) Bill 2011 into Parliament under which a registrable superannuation entity (RSE) licensee intending to offer a MySuper product must seek authorisation from APRA.

The MySuper authorisation package released today builds on APRA’s release on 27 April 2012 of draft prudential standards for superannuation. A number of elements in the draft authorisation application form request the submission of documents that will be required under the prudential standards.

APRA Deputy Chairman Ross Jones said the proposed authorisation requirements have been carefully aligned with the legislative requirements. 

‘We encourage RSE licensees considering offering a MySuper product to use the draft application form and instructions in discussions with their Board on their plans, and to open discussions with APRA supervisors on the issue as soon as possible.’

The authorisation process for RSE licensees wishing to offer MySuper products will commence from 1 January 2013. Once authorised, RSE licensees can offer these products from 1 July 2013 onwards.

Draft SPS 410 outlines requirements for all RSE licensees during the transition period from 1 July 2013 to 1 July 2017, by which date all accrued default amounts must be in a MySuper product except in limited circumstances.

The consultation package can be found on the APRA website at: www.apra.gov.au/Super/Pages/Superannuation-reforms-2011-2013.aspx

The Federal Governmenthas announced in the Budget it will increase the application fee to obtain an Australian financial services (AFS) licence to cover the costs of implementing the Future of Financial Advice reforms.

The Australian Securities and Investments Commission (ASIC) has been allocated $10.7 million over four years to develop and maintain an on‑line registration system for auditors of self managed superannuation funds (SMSFs).

As part of the registration process, ASIC will develop a competency exam for SMSF auditors. ASIC will also be responsible for the deregistration of non‑compliant auditors. Auditors may begin to register with ASIC from 31 January 2013.

The Government will also provide $10.6 million over five years (including $1.5 million in capital funding in 2011‑12) to the Australian Taxation Office to police registered auditors, check their compliance with competency standards set by ASIC and refer auditors to ASIC, for enforcement action.

The cost of this measure will be offset by increases in the SMSF levy and fees charged by ASIC for sitting the competency exam.

The Federal Budget has provided $467.1 million over seven years (including $41.2 million in 2016-17 and $40.9 million in 2017-18) to implement the SuperStream reforms that are part of the package of Stronger Super reforms.

The Australian Securities and Investments Commission (ASIC) has received new funding totalling $180.2 million over four years in the 2012-13 budget.

John D Rogers, CFA, president and CEO of CFA Institute, has issued a call to action to the global investment community at the organization’s 65th Annual Conference in Chicago, calling on the profession to take personal responsibility to restore investor trust and reconnect with the public interest. Rogers outlined three steps the profession must take to achieve this goal, including exercising a bolder voice for professional ethics; focusing on financial activities that enable economic and social progress; and engaging with a wider community to share, teach and engage. (Read a copy of Rogers’ speech.)

Global professional services specialist KPMG has published a review of the country’s major banks, find they continue to perform well on the global stage, despite some negative effects in the global funding markets and ongoing structural change.

A report into Compensation arrangement for consumers of financial services, prepared by Mr Richard St. John, has been released. The report highlights the need for  appropriate avenues for compensation for retail consumers of financial services.

Western Australian Treasurer Christian Porter has announced that Expressions of Interest will be sought for the provision of the Government Employees Superannuation Board’s (GESB) administrative services.

Mr Porter said the move followed the decision to allow State Government employees to choose their super fund from March 30, 2012, the central reform recommended in the Whithear Review.

“As a result of this choice reform - which has been overwhelmingly supported by public sector employees - GESB will not have the economies of scale to offer the most cost effective administration services in the long run,” he said.

“If GESB is prevented from exploring options to lower the cost of providing administrative services, the effect could be higher costs to those who do choose to remain with GESB.”

Mr Porter said procuring administrative services from a specialist external provider would be aimed at achieving lower costs to members.  Outsourcing should also enable GESB to keep pace with the many superannuation reforms and other challenges in a rapidly changing industry.

Mr Porter said many super funds across the industry were currently procuring administration services from external providers to minimise operating costs and gain efficiencies through economies of scale.

“The Government is undertaking this reform so that GESB will be able to ensure their administrative costs are competitive,” he said.

Mr Porter said the provision of GESB’s superannuation administration services was expected to appeal to the market and should result in better outcomes for both existing members and future State employees, primarily from competitive fees and services to members, particularly over the longer term as the superannuation industry continued to consolidate these services.

“This opportunity to compete for the provision of these services offers the market an exciting opportunity to engage with the State and GESB in these reforms to maintain competitive services to members,” he said.

Invitations for Expression of Interest for provision of administrative services will be issued to the market in June and it is anticipated that transition to new superannuation administration service arrangements will begin in the second half of 2013.

Colonial First State has announced a major shake-up of its executive management team, with Chief Executive Officer Brian Bissaker reportedly leaving his post after the role being made redundant.

The Commonwealth Bank has announced the resignation of Group Executive Retail Banking Services, Ross McEwan, after he accepted the role as Chief Executive Officer, UK Retail with the Royal Bank of Scotland.

The ASIC personal finance website MoneySmart launched the Top 4 End of Financial Year Tips.

The tips tell Australians now is the time to get organised, set some goals, consider a first home savings account or sort your super.

Delia Rickard, Senior Executive Leader Financial Literacy said “The end of financial year is not only a time to set up solid financial practices; it is the perfect time to get your super right. Especially since some superannuation benefits will be less generous after 30 June.

“Being ‘MoneySmart’ this end of financial year means thinking beyond receipts to reassessing your finances and planning for your future. This applies no matter your age or life stage,” she said.

Here are MoneySmart’s Top 4 Tips for 2011/2012 end of financial year:

Financial advisers will be granted an extension to their exemption from the taxation agent services regime until 30 June 2013, said Assistant Treasurer David Bradbury.

Insurance group QBE has announced a series of major changes to its Group Executive structure following the announcement of Frank O’Halloran’s retirement form the role of Group Chief Executive Officer and John Neal’s appointment to the role effective this August.