Archived News for Finance Sector Professionals - February, 2012
The Australian Prudential Regulation Authority (APRA) has released its Annual Superannuation Bulletin, setting out information on the performance of the superannuation industry in the past year.
Key findings of the Bulletin include:
- Total superannuation assets increased by 11.5 per cent during the year to 30 June 2011 to $1.34 trillion. Of this total, $810.6 billion are held by APRA-regulated superannuation entities and $407.6 billion are held by self-managed superannuation funds (SMSFs), which are regulated by the ATO. The remaining $117.0 billion
comprises exempt public sector superannuation schemes ($80.9 billion) and the balance of life office statutory funds ($36.1 billion).
- During the June 2011 quarter, an industry fund merged with a public sector fund. The merger resulted in an increase in public sector funds' assets, members and net rollovers, and a decline in industry funds' assets, members and net rollovers.
- Public sector funds' assets increased by 21.9 per cent during the year to June 2011. Small funds, which include SMSFs, single-member approved deposit funds and small APRA funds' increased by 11.5 per cent, industry funds by 10.8 per cent, retail funds by 8.9 per cent and corporate funds by 3.7 per cent.
- As at 30 June 2011, small funds held the largest proportion of superannuation assets, accounting for 31 per cent of total assets. Retail funds held 28 per cent of total assets, industry funds held 19 per cent, public sector funds held 16 per cent and corporate funds held 4 per cent of total assets.
- The number of member accounts decreased by 4.6 per cent during the year to 31.3 million.
The Federal Government has released the discussion paper on the Key Facts Sheet: Home Building and Home Contents Insurance Policies, with an aim to improve clarity and transparency in coverage.
The Federal Government has introduced legislation before Parliament that will seek to improve the quality and transparency of the auditing process.
Wealth manager, Perpetual Limited, has announced a statutory Net Profit After Tax1 (NPAT) of $22.9 million for the six months to 31 December 2011, a 35% drop on the previous year.
The Reserve Bank of Australia (RBA) has come out in support of the country’s big banks, with Glen Stevens defending the increasing profitability of the big four in his address to the House of Representatives Standing Committee on Economics.
The Australian Bureau of Statistics has released its updated figures on managed funds in Australia, finding the industry has $1782.1 billion in funds under management, an increase of $4.6 billion on the September quarter figure of $1,777.5 billion. The growth was driven by an increase of $9.1 billion in consolidated assets of managed funds institutions.
ANZ has announced it will follow growing investor demand for its offer of ANZ Subordinated Notes in issuing $1.5 billion under the Bookbuild with the Margin for proposed issue set at 2.75 per cent.
The Australian Securities and Investments Commission (ASIC) has released a consultation draft regulatory guidance with new disclosure benchmarks aimed at improving investor awareness of associated risk.
Treasurer Wayne Swan has announced he will not be attending G20 Finance Ministers’ meeting in Mexico City over the weekend, with Finance Deputy Mike Callaghan being sent to represent him.
The Federal Government has announced it will be introducing reforms to further strengthen the country’s executive remuneration framework.
The next phase of reforms has been developed after a consultation process on a proposal for ‘clawback’ and will also implement several recommendations made by the Corporations and Markets Advisory Committee (CAMAC) to improve disclosure in remuneration reports.
Under the reforms, listed companies will be obliged to disclose to shareholders through the remuneration report the steps taken to clawback bonuses and other remuneration where a material misstatement has occurred in relation to the company’s financial statements.
If the company has not clawed back any remuneration, the board will be required to provide a detailed explanation to their shareholders. If shareholders are unhappy with the company’s actions, they would be able to use their powers under the two-strikes rule to vote down the remuneration report and potentially spill the board.
“These reforms put the onus on listed companies to make sure they have provisions to clawback bonuses and other pay from executives if there has been a material misstatement of a company’s financial statements,” Secretary to the Treasurer David Bradbury said.
“If they don’t, they run the risk of shareholders recording a ‘strike’ against them at their annual general meeting when they vote on the remuneration report and potentially voting to spill the board and force fresh elections of directors.”
In response to CAMAC’s 2011 report on executive remuneration, the Government will be improving disclosures contained in remuneration reports, by requiring more transparent disclosure of termination payments or ‘golden handshake’ payments. Unnecessary disclosure requirements will be removed to simplify remuneration reports, and clearer categorisation of pay will be introduced to better enable shareholders to understand the company’s remuneration arrangements.
The CEOs of CPA Australia and the Institute of Chartered Accountants in Australia have written to the Minister for Financial Services and Superannuation, Bill Shorten, warning of the risks of limiting the capacity of accountants to give financial advice.
ASIC has issued a new regulatory guide which outlines the circumstances under which relief will be given to investment funds from the prohibition against indirect self-acquisitions.
Indirect self-acquisition occurs where shares in a company are issued or transferred to an entity it controls. The Corporations Act 2001 voids such an issue or transfer of shares unless certain exceptions apply (refer to s259C).
Regulatory Guide 233 Indirect self-acquisition: Relief for investment funds (RG 233) provides that ASIC may grant conditional relief for investment funds and similar entities to acquire shares in their listed parent company for the benefit of investors. This relief, for example, may assist a subsidiary of a listed company that is also the responsible entity of an investment fund acquiring shares in the listed parent company on behalf of the fund under its investment mandate. ASIC may also grant conditional relief to controlled entities of listed companies engaged in index arbitrage and client-driven activities involving baskets of securities.
The guidance outlines that ASIC’s relief will be subject to conditions to address the risks associated with self-acquisitions. For instance, conditions might include a 5% limit on the total interest in a parent company that may be held by its controlled entities (subject to certain limited exclusions) and a prohibition on the voting of such shares. We will also require as a condition of relief regular reporting to the market of a controlled entity’s interests in its parent’s shares.
ASIC’s relief is likely to be used by subsidiaries of a small number of listed companies in the financial services sector who may also be subject to regulation by the Australian Prudential Regulation Authority. ASIC has previously provided relief on a case-by-case basis to these entities and has now finalised its policy after seeking feedback from industry on some issues (refer: CP 137Indirect self-acquisition by investment funds: Further consultation (CP 137); and CP 162 Indirect self-acquisition by investment funds: Further consultation – Employee share schemes (CP 162))
The Australian Centre of Excellence for Local Government (ACELG) today released a new Practice Note on Long Term Financial Planning. The Practice Note was prepared by the Institute for Public Works Engineering Australia (IPWEA), with funding from the Commonwealth Government's Local Government Reform Fund. It is designed to improve the financial performance of local government by assisting local councils to prepare better long‐term plans.
IPWEA President Paul Di Iulio explains: “Most infrastructure assets are long lived. They require increasing maintenance as they age and eventually need renewal. It is essential that we plan for this investment with effective long‐term financial planning.”
Local Government Minister Simon Crean welcomed the release of the Practice Note.
“Local government plays a vital role in the life of our nation, not only in the delivery of local services, but in building communities, planning for future challenges and strengthening local economies,” Mr Crean said.
The Self-Managed Super Fund Professionals' Association of Australia (SPAA) has appointed Graeme Colley to the new role of Director of Education and Professional Standards.