Fund Product, Company and Regulatory Updates as at 1 July 2019

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Product Updates

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Hostplus launches new SMSF solution
A new product has been launched for self-managed superannuation funds (SMSFs), Hostplus’ Self-Managed Invest (SMI) options, to offer access to a series of assets typically unavailable to retail investors.

Funds are entered into the system via the Pooled Superannuation Fund (PST) structure, with reduced administration, compliance and reporting obligations, and accessing cost-effective investments using Hostplus’ scale, expertise and experience.

SMSF investors are able to access six of 23 investment options, the flagship balanced option, very low cost indexed balanced option, and the unlisted options of infrastructure and property. The whole process is digital. So far about 50 SMSFs have signed up.

Vanguard drops fund fees
From the beginning of July Vanguard is to lower fees on some funds and exchange-traded funds (ETFs). The funds that will see a fee drop include:

  • Australian Shares Index Fund (fees now 0.16 per cent per annum)

  • Australian Shares High Yield Index Fund (fees now 0.35 per cent per annum)

  • Australian Government Bond Index Fund (fees now 0.24 per cent per annum)

  • Australian Shares Index ETF (fees now 0.10 per cent per annum)

Fidelity launches company rating system
Fund manager Fidelity has launched a new system for rating companies based on research it does. The rating system divides investments into 99 subsectors, with industry-specific criteria comparing companies with their peers. Scores range from A to E, with A being the most sustainable and E being the least sustainable. The ratings will be updated annually, following a change of policy, or after an exceptional company event.

OpenMarkets launches trading platform
Execution-only share trading platform OpenMarkets Australia has launched a new trading platform, OpenMarkets Equix. Available as a web, Android or Apple app, Equix serves self-directed investors and financial advisers who are executing trades and investing in Australian securities. There are several versions available, including a free click-refresh-live-data version and a paid streaming version.

Sunsuper and Future Super cut fees
Weekly fees for pension members will be reduced from $3 to $1.50 and investment fees for the default investment option will decrease from 0.80 per cent to 0.73 per cent and Super-savings member default options decrease from 0.85 per cent to 0.79 per cent.

Low balance members at Future Super will have fees reduced from 1 July. The set dollar administration fee will be adjusted to account for balance, with any members with less than $6,000 having a reduction. Those with balances under $1,000 are not charged any administration fees at all.

The changes come right before Protecting Your Super reforms kick in from 1 July.

GuildSuper and Childcare Super increase group insurance premiums
The two parts of the Guild Retirement Fund, GuildSuper and Childcare Super, are increasing group insurance premiums and investment fees ahead of Protecting Your Super reforms in July. Income protection premiums will see the biggest hike, up 34.9 per cent.

Life cover is up 9.2 per cent and total and permanent disability cover is up 25.2 per cent. Some investment fees have reduced, while others have increased. The funds will now cease charging a $60 exit fee to leave the fund.

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Company Updates

Clime Capital and CBG Capital to merge
An off-market takeover bid has been made for Clime Capital to acquire CBG Capital, with CBG Capital advising its shareholders and directors to accept the offer. Clime Capital is offering 0.8441 of its fully paid ordinary shares and 0.274 per cent of its listed convertible notes for each CBG share held, bringing the value of each CBG Capital share to $1.0336. CBG Capital shareholders will own almost 20 per cent of Clime Capital shares and 24 per cent of its convertible notes after the deal is completed.

Both companies invest in Australian small, mid and large caps, with both companies listed on the Australian Stock Exchange. At the end of May 2019 Clime Capital’s portfolio was valued at $109 million, while CBG Capital’s had $28 million in funds under management. There were two options, said the executive team, of winding up the company or selling it on, with the latter more attractive.

MTAA Super and Tasplan consider merger, Statewide Super quits merger talks
A memorandum of understanding has been entered into to examine what a merger of the two super funds might look like. The merged entity would create a fund with over $22 billion in funds under management and 328,000 members.

Other growth strategies have caught the eye of Statewide Super, it says, as it halts merger plans with Tasplan and WA Super. The talks have been unsuccessful, with Statewide wishing to pursue growth.

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Regulatory Updates

AIC accepts EU from CBA
The Australian Information Commissioner (AIC) has accepted an enforceable undertaking (EU) by the Commonwealth Bank of Australia (CBA) relating to the management and retention of personal information on customers within the bank and its subsidiaries.

The EU comes after ongoing work at the bank to address two incidents - one regarding the disposal of historical customer statements and the other relating to internal user access to some computer systems and applications that contain the personal information of customers.

Both incidents were reported to the AIC, and work has commenced since to correct these issues. There is so far no evidence that customer information was compromised or of third-party access.

APRA tightening super fund acquisition regulations
As of 5 July 2019 the Australian Prudential Regulatory Authority (APRA) is requiring any party looking to buy a stake of 15 per cent or more in a Registrable Superannuation Entity (RSE) to get their approval. The approval is to make sure that the new ownership structure does not interfere with the ability of the RSE to meet its obligations. This brings the superannuation sector in line with banking and insurance.

ASIC extends suspension of BBY AFS licence
The Australian financial services (AFS) licence held by BBY Limited has had its suspension extended until 28 May 2020. This is the second extension of the suspension, which is in place to ensure certain elements of the business are left intact for best outcomes for clients as the company is dismantled.

ASIC seeking feedback on new product intervention powers
ASIC has begun the consultation process for its new product intervention power, whereby the regulator can intervene and take action where financial or credit products have resulted in, or are likely to result in, significant consumer detriment. ASIC is seeking industry input into the checks and balances to help it make best use of its powers.

ASIC can ban a product or feature, impose sale restrictions, amend product information, and other actions. Australia joins many other jurisdictions with this new power, including the United Kingdom, the United States, Europe, Hong Kong and Taiwan. Input closes 7 August 2019. Another consultation will occur later in 2019 on the design and distribution obligations.