Fund Product, Company and Regulatory Updates as at 17 July 2018

Product Updates

QSuper reduces admin fees
QSuper has lowered its administration fee from 18 basis points to 16 basis points, with annual admin fees capped at $900, a reduction from $1,000. These fee reductions apply to all members. 

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Westpac terminates SMSF loans
Westpac self-managed superannuation fund (SMSF) customers will soon no longer be able to borrow and buy residential investment properties in Australia, when the bank ends its SMSF loan offering. The bank says this is to simplify its product suite.

As it stands, customers can buy residential investment properties via their SMSFs from about $200,000 to $2 million. The fund balance must have at least $200,000. At approval, the property is mortgaged to Westpac and the bank advances the loan. 

Company Updates

Sunsuper and AustSafe Super sign merger agreement
Sunsuper is to merge with AustSafe Super in 2019 after a Successor Fund Transfer Deed was signed. These two long-running funds have together 1.4 million members and 130,000 employers. Sunsuper merged with Kinetic Super earlier this year. 

Prime Super and Combined Super talking of a merge
Two Victorian super funds are in talks, contemplating a merger of their 120,000 members. Combined Super and Prime Super have signed a memorandum of understanding, with the combined fund to manage around $5 billion in funds. 

Regulatory Updates

ASIC investigating Linchpin Capital Group and Endeavour Securities (Australia)
ASIC has taken action against two companies operating managed investment schemes, with both schemes called Investport Income Opportunity Fund. ASIC is alleging that the scheme is being run without proper licensing by Linchpin, Endeavour has contravened the Corporations Act with transactions and disclosure, and money has been misapplied or misappropriated by both companies. The investigation continues. 

ASIC accepts EU from Goldman Sachs Australia
ASIC has accepted an enforceable undertaking (EU) from Goldman Sachs Australia to work towards improving controls related to bookbuild messaging in some equity capital market transactions lead managed by the company. A bookbuild is a process that generates, records and captures investor demand for capital raising transactions.

ASIC had concerns about Goldman Sachs regarding some representations made to potential investors regarding the minimum fixed demand. Goldman Sachs must now implement changes to its controls and processes, and make a benefit payment of $500,000. 

ASIC accepts EUs from CBA and ANZ regarding superannuation product distribution
ASIC has accepted EUs from both the Commonwealth Bank of Australia (CBA) and the Australia and New Zealand Banking Group (ANZ), with the outcome being that both banks will update their distribution methods for superannuation to their customers.

These products are commonly offered through bank branches after a general fact-finding process regarding a customer's banking arrangements, which at CBA is called a 'Financial Health Check' and at ANZ is an 'A-Z Review'. At the end of these fact-finding sessions, superannuation products were offered to customers or their accounts were rolled over into bank-owned superannuation funds.

ASIC says this amounts to personal advice regarding superannuation, when branch staff are only authorised to provide general advice. ASIC's concern was that customers were under the impression that the recommendations of superannuation changes were a result of advice being given after the fact-finding, taking their personal situation into account, which would amount to personal advice - and requires further training and authorisation.

Both banks must pay $1.25 million to a community benefit and cease the practice.