Fund managers’ efforts to become single responsible entities are being paralysed by government inaction.
IFSA deputy chairman and Colonial First State Investments chief executive Chris Cuffe told Financial Services Minister Joe Hockey at a recent IFSA lunch that the failure of governments to provide an easy passage was “paralysing parts of the industry.”
With only four months to go before the deadline for managers to convert, only a handful of funds have retired trustees as required by the Managed Investment Act.
Only three fund managers, including Deutsche Funds Management and Credit Suisse Asset Management, have completed the requirements to form a single responsible entity. The bigger players in the industry are still waiting on the Federal and State Governments to provide surety over two key tax implications.
But under the Managed Investment Act provisions, failure by fund managers to retire trustees by July 1 would force each group to have a meeting of unit holders which many claim is a massively expensive exercise.
IFSA senior policy manager Philip French says the Federal Government is dragging its feet by not providing a guarantee that the change will not be defined as a capital gains tax event and trigger a massive tax bill for fund managers.
A number of the State Governments have also failed to provide similar guarantees that stamp duty requirements will not affect the changeover.
Cuffe says the Government has rushed through the legislation and failed to give it the appropriate backing of related issues.
“When the SIS Bill (similar legislation for superannuation funds) was drafted, these issues were covered,” he says.
“But the failure to provide guarantees with this legislation has rendered it Clayton’s legislation that none of us can act on.”
