Costello to act on trans-Tasman funds crisis
TheFederal Treasurer Peter Costello is considering lobbying New Zealand ministers over problems Australian fund managers are having across the Tasman.
Fund managers can promote their offers in New Zealand, using their Australian documentation, as long as they meet certain criteria laid out in a New Zealand Securities Commission exemption notice.
One of these requirements is that changes to the documentation are registered in New Zealand at the same time they are made in Australia.
Failure to do so can result in the manager having to return the original capital to unitholders, plus 10 per cent annual interest.
Two managers,BT Funds Managementand Edinburgh Fund Managers, have already told the commission they are in breach of these requirements.
The AustralianInvestment and Financial Services Association(IFSA) has lobbied Costello to pressure his New Zealand counterparts and he is understood to be considering an approach at ministerial level.
“It’s still early days but we hope something can be worked out,” IFSA deputy chief executive Jo-Anne Bloch says.
Many in the savings industry consider the penalty draconian, and a number of other fund managers are also believed to be in breach of the rules.
“The rule is pretty strong to start off with, but the penalty is out of all proportion to the wrong done. It’s not a question of us condoning this — our members expect to abide by the spirit of the law. But we have very strong concerns about how this law is being applied,” Bloch says.
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