Risk Product, Company and Regulatory Updates as at 6 August 2019

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Product Updates

IRESS improves Xplan

Xplan has been renovated, with improved functionality to the advice software platform announced after a year of testing. Users should now be able to find what they need faster, have improved search functionality, and more support via the Iress Community documentation, training videos and other support.

FPA CPD platform launch

Financial Planning Association (FPA) members will now be able to track continuous professional development (CPD) points on the FPA Learn online education platform, using My CPD. The platform enables members to obtain CPD requirements by offering a list of providers.

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Company Updates

CountPlus shareholders in favour of acquiring Count Financial

Shareholders of CountPlus have voted in support of the proposed acquisition of Count Financial Limited from the Commonwealth Bank of Australia. An extraordinary general meeting was held at CountPlus with almost every shareholder in favour of the purchase - 99.76 per cent.

CountPlus is to acquire Count Financial, the Australian financial services licensee for 160 financial advice practices, comprising 359 advisers, for $2.5 million. CBA has also said it will be selling its 36 per cent stake in CountPlus.

CBA approved to divest CFSGAM

All regulatory approvals have been achieved for the divestment of the Commonwealth Bank’s asset management business, Colonial First State Global Asset Management (CFSGAM), to Mitsubishi UFJ Trust and Banking Corporation. Final sale proceeds are expected to hit $4.2 billion, subject to adjustments.

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Regulatory Updates

APRA stakeholder survey shows regulator favour dropping

The Australian Prudential Regulatory Authority (APRA) stakeholder survey offers insights into how favour is falling for the regulator after the Royal Commission. The 2017 survey showed a consistent downward trend when compared to the 2019 survey, even though results were ‘consistently strong’.

The survey, conducted by Orima Research, examined the positions of 280 regulated entities in the banking, superannuation and insurance industries, and asked the views of 70 ‘knowledgeable observers’ (actuaries, auditors, industry association leaders).

NAB document leak

A whistleblower at NAB has revealed the minutes from a meeting between NAB chair Ken Henry (who is leaving in November) and the bank’s external auditor Ernst & Young (EY), where Henry expresses his personal concern that the bank is still issuing products that he believed would require remediation in the future.

In particular, Henry noted the practice of lending money to self-managed superannuation funds for investing in managed funds would end up in the remediation circle. There also appears to be significant differences in a report prepared by EY for APRA and the confidential review notes regarding NAB’s risk management and culture, according to a Sydney Morning Herald piece.

MLC adviser fee class action plans

IMF Bentham and William Roberts Lawyers are bringing a class action against NULIS Nominees, MLC’s superannuation fund trustee, alleging that NULIS breached its obligations to act in the best interests of members of the MLC Super Fund.

Some fees were allegedly used to pay commissions and other fees to financial planners, charged after the Future of Financial Advice reforms banned such conflicted remuneration in 2013. NULIS took over as trustee of MLC Super Fund in 2016, and decided to maintain those conflicted fees paid to advisers from member accounts. The class action argument is that NULIS has therefore breached its duties to act in the best interests of its members.

Financial advisers will not be sued. Members are to seek the fees plus interest back.

ASIC suing ANZ over periodical fee payments

The Australian Securities and Investments Commission (ASIC) has taken ANZ to court for allegedly wrongfully charging customers periodic fees in excess of $50 million across 1.3 million fees. ASIC asserts that ANZ continued to charge the fees during this period despite the bank knowing that it was possibly not entitled to charge such fees.

Periodical payments are defined as a payment from an ANZ account to the account of another person or business, and excludes payments between two accounts in the same name, person or business. ASIC alleges that ANZ was charging transaction fees and non-payment fees for periodical payments between accounts of the same name. Fees were charged if the payment was successful, and non-payment fees were charged when it was not. These fees ranged from $1.70 to $4 for businesses and either $4 or free for retail accounts, while the non-payment fees were $35-$45 for business accounts and $6-$45 for retail accounts.

ASIC says ANZ first became aware that they were not entitled to charge these fees in 2011, however did not provide written notification to ASIC until 2014, notify affected customers until 2015, change its terms and conditions until 2016, and start making remediation payments until 2016. Fees continued to be charged during the 2003-2016 period.

For more details, see ASIC’s media release

FASEA exam update

The Financial Adviser Standards and Ethics Authority (FASEA) is gearing up to release its first set of exam results for financial advisers. The June 2019 adviser exams are being marked and analysed. Six new exam locations will be added for the September 2019 exam series in the Gold Coast, Cairns, Newcastle, Wollongong, Ballarat and Bunbury, with two sitting days each. More locations are to be added for the December and January exams.

Grandfathering commissions proposed ban date 1 January 2021

Legislation is set to go into effect to ban grandfathering of conflicted investment and superannuation commissions paid to financial advisers by 1 January 2019, following recommendations by the Royal Commission. The legislation was introduced to Parliament on August 1.