This article is from the Australian Property Journal archive
ADPIA made a submission to ASIC in relation to Consultation Paper 140 (CP 140) on the financial requirements of responsible entities of registered managed investment schemes.
ASIC had invited submissions on its reform which aims minimise the risk of responsible entities insolvencies and to ensure that fund managers have adequate financial resources.
In its submission, ADPIA said whilst the body fundamentally supported a financially stable funds management sector, it had some genuine concerns about some of the proposed changes.
ADPIA president Robert Olde said the proposed reforms are not likely to have prevented the collapses.
He added that those companies were, prior to the Global Financial Crisis, in a very robust financial position and they could have met the increased financial requirements being proposed.
CP 140 was released in response to recommendations made by the Parliamentary Joint Committee on Corporations and Financial Services in their inquiry report titled “Aspects of agribusiness managed investment schemes” dated 7 September 2009.
“This inquiry was instigated following the collapse of a number of large agribusiness managed investment scheme operators. ADPIA submits that the proposed NTA reforms in CP 140 would not have prevented these collapses, nor would they have prevented the collapse of other large fund managers in other asset classes,” he continued.
Olde said the reforms are also likely to force small to medium sized fund managers from the industry and will block new entrants, meaning there will be less competition and therefore, less choice for investors.
“Additionally, we do not believe the reforms will meet what we consider to be ASIC’s primary objective, which is to prevent/minimise investor losses that flow from the insolvency of a responsible entity.
“This should be addressed through reform of the insolvency laws that encourage the appointment of temporary responsible entities that can step in to protect fund assets prior to the appointment of insolvency practitioners,” he concluded.
Australian Property Journal
