Archived News for Finance Sector Professionals - August, 2011

Treasury has released an exposure draft legislation for the extension of the Petroleum Resource Rent Tax (PRRT) for public comment.

The Federal Government has launched an online mapping service to assist people in financial difficulty find their nearest financial counsellor.

Difficulties navigating the quagmire of educational bureaucratic red tape has been cited as the main contributing factor to KAPLAN, the education arm of the Washington Post, deciding to pull out from its plans to establish a university specialising in financial services education in Adelaide.

RBA Chairman Glenn Stevens has told a Federal Government committee hearing that household spending continues to remain low in the wake of dropping consumer confidence and global economic uncertainty.

Self-managed superannuation funds (SMSAs) have grown a further $3 billion in the last financial year, making further inroads into the $1.4 trillion industry.

The Australian Workers’ Union (AWU) and the Australian Manufacturing Workers’ Union (AMWU) have joined the call for the Reserve Bank to cut interests rates as part of a package to rescue the ailing Australian manufacturing industry.

The Bank of Queensland has announced that Stuart Grimshaw will take the role of chief executive officer of the company after David Liddy departs the role.

The spate of natural disasters in Queensland earlier this year has shredded 42 per cent off Suncorp’s net profit, reducing the company’s net profit to $483 million after the company processed over 100,000 claims relating to floods, Cyclone Yasi and earthquakes. The massive hike in insurance claims was about $600 million more than the company had provided for.

The Federal Government has introduced a new Parliamentary Budget Office (PBO) legislation before Parliament.  If passed, the legislation will see the formation of the new office that will have regulatory powers that will seek to introduce increasing levels of transparency and dissemination of information regarding budget policy proposals.

Official interest rates are likely to hold steady until Christmas, according to National Australia Bank chief Cameron Clyne.

Despite a number of high profile executives leaving the company in the recent months, Fairfax chief Greg Hywood has voiced his confidence in his company’s robustness.

The Assistant Treasurer and Minister for Financial Services and Superannuation, Bill Shorten, has released a consultation paper on proposed modifications to the superannuation contributions caps.

NECDL – the company charged with developing a national electronic system for property exchange – has signed a master agreement with Accenture to design and build a national e-conveyancing platform for Australia.

From 1 October 2011, new rules will require banks to collect information, record and report on the identity of anyone performing a cash transaction of $10,000 or more to the Australian Transaction Reports and Analysis Centre (AUSTRAC).

Legislation that will offer tax breaks to foreign investment in Australia is set to grow the $1.8 trillion industry, according to Assistant Treasurer and Financial Services Minister, Bill Shorten.

KPMG has announced Duncan McLennan as the firm’s new National Audit Managing Partner, and Rob Bazzani to the role of Victorian Chairman, effective immediately.

The Institute of Chartered Accountants in Australia has called on the Minister for Innovation, Industry, Science and Research, Senator Kim Carr, to place more emphasis on the ‘impact’ of academic research, especially for the accounting profession.

The need for a measurement of research ‘impact’ is the subject of a new academic thought-leadership publication, Bridging the Gap between Academic Accounting Research and Professional Practice, developed by the Institute and the Centre for Accounting, Governance and Sustainability (CAGS) in the School of Commerce at the University of South Australia.
 
The issue of ‘impact’ raised in the book is based on a forum held earlier in the year where leading Australian and overseas academics, practitioners, public policy representatives and Institute members openly debated the need for relevance and greater understanding of the impact of academic accounting research.

The Institute’s CEO, Graham Meyer, states in the book, ‘The Institute recognises the important role of accounting research and the potential costs to the accounting profession and the wider community if academic accounting research loses its relevance or does not have a demonstrated impact on public policy or practice.’

Professor James Guthrie, the Institute’s Head of Academic Relations, added, ‘It’s a topic that is timely, as the Excellence in Research for Australia (ERA) 2012 draft guidelines currently set by Senator Carr do not refer to measuring the impact or relevance of academic research.’

‘Research must align with what policy makers and practitioners need. To do this, a shift needs to occur whereby we talk about research in terms of quality outcomes. Is it relevant to practitioners? How does it impact policy makers and society?

‘Going forward, what we need are detailed discussions to take place with key stakeholders from across policy, practice and academia, with defined roles and responsibilities agreed. Through more collaboration, research outcomes would deliver tangible outcomes for the accounting profession and the public.’ 
 
A complimentary PDF copy of the new book can be accessed on the Institute website or the CAGS website.

The Australian Securities and Investment Commission has released new disclosure benchmarks for contracts for difference (CFDs) that aim to improve disclosure and investor awareness about risks of these products.

The guidance also covers margin foreign exchange contracts.

In Australia, most CFDs are issued as over-the-counter (OTC) products, making them increasingly accessible and popular with retail investors. But CFDs are a high-risk financial product and their complexity means they are unlikely to meet the investment needs of many retail investors.

ASIC Chairman Greg Medcraft said action was needed to ensure people considering CFDs are aware of the downside as well as the upside.

‘CFDs are extremely risky financial products. Most investors don't understand that complexity and they don't get independent financial advice. That means we need CFD issuers to do a much better job of spelling out to investors the risks as well as the rewards of these complex products,’ Mr Medcraft says.

‘ASIC’s number one priority is ensuring investors and financial consumers are confident and informed. We want issuers to work harder to ensure people investing in CFDs better understand what they are getting into – before they start trading.’

Regulatory Guide 227 Over-the-counter contracts for difference: Improving disclosure for retail investors (RG 227) outlines seven benchmarks which aim to help investors understand the risks and benefits of OTC CFDs. Issuers must address these benchmarks in product disclosure statements (PDSs) from 31 March 2012.

The seven benchmarks (see ‘Background’ for further details) mean issuers will need to address each issue in their PDSs on an ‘if not, why not’ basis. The benchmarks are:

UniSuper’s CEO, Terry McCredden, has been awarded the Fund Executive of the Year award after “demonstrating exceptional leadership in the areas of advice, investment management, risk management”.

The Commonwealth Bank of Australia (CBA) has announced a 22 per cent second-half profit on home and business lending, recording a total increase of 13 per cent profitability.