Networth News

Welcome to the Networth News update for Wednesday the 14th of September.

Financial planners need to manage conflicts of interest

Managing conflicts of interest is high on the priority list of big financial planning businesses trying to reduce their risk factors – but more work remains to be done, according to the Australian Securities and Investments Commission. A recent ASIC report found that key concerns in the financial advice industry include tendencies to recommend only a few key products to clients, earning commissions through issuing asset-based fees and the use of “buyer of last resort programs” as a source of compensation. The corporate regulator is performing risk-based surveillance to examine business models, as well as the way financial planning businesses train, mentor and supervise their advisers.

Banks vulnerable to global liquidity squeeze

Australian banks are increasingly vulnerable to a tightening of global liquidity, according to Standard & Poor's (S&P). The Australian reports that global investors are increasingly worried about the European sovereign debt crisis, which is pushing bank borrowing costs in Europe higher and impacted global credit markets. Kyran Curry, S&P's primary credit analyst for Australia, said economies with highly leveraged financial systems were most exposed to tightening liquidity conditions around the world.

New ATO rules apply for trustees

There will be severe penalties for trustees who do not comply with new rules applying for the past financial year. The Financial Review reports that the rules, which apply to a range of trusts, require trustees to lodge a new form called a TFN with the Australian Taxation Office (ATO). Many trustees are not aware of the new rules, and while the deadline for compliance was extended to 31 August, the maximum penalty for non-compliance is up to $2200 for a first infringement.

Double standards under FoFA for super funds

The introduction of opt-in combined with a collective fee to be paid by superannuation fund members for personal advice amounts to a double standard, according to The Corporate Super Specialist Alliance (CSSA). Money Management reports that the government is planning to introduce a compulsory intra-fund advice fee into both MySuper and other corporate super funds, in addition to requiring other advice clients to opt-in every two years under Future of Financial Advice (FoFA) reforms. CSSA president, Douglas Latto, said this was a patent demonstration of double standards and that the collective fee is a “one size fits all” model.