Funds unimpressed by Rudd offer

The funds management industry is less than impressed with Prime Minister Kevin Rudd’s proposals to provide funding to the Australian Prudential Regulation Authority (APRA) to allow mortgage funds to apply for approved deposit-taking institution (ADI) status.

According to senior funds management executives, the process outlined by the Prime Minister does not represent an optimal approach on the part of the Government in circumstances where it could take funds management companies up to six months to gain ADI status.

“There are other ways and that is something we will be continuing to discuss with the Government,” one senior executive told Money Management.

The Prime Minister last night used an address to reveal that the Government would be providing a further $83 million in funding to APRA to enable it to speed up applications from funds management companies seeking ADI status.

However, he stressed that, in doing so, those funds management companies would need to pass all the regulatory and prudential hurdles that went with being an ADI.

The Prime Minister’s announcement had been flagged to both the political media and some senior funds management industry representatives late yesterday afternoon, but the consensus within the industry this morning was that while the Government was clearly trying to help, the ADI proposal did not represent an adequate answer.

In the meantime, ratings houses have continued to place those mortgage funds that have frozen redemptions ‘on hold’.