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List of Recommendations
Recommendation 1
3.77 The committee acknowledges the shortcomings,
identified by Mr Richard St. John, of a statutory compensation scheme for
consumers of financial services, and a scheme of financial assistance for
investors in managed investment schemes along the lines of Part 23 of the Superannuation
Industry (Supervision) Act 1993. However, the committee recommends that
further efforts be made to investigate avenues to protect investors in the case
of theft and fraud by a managed investment scheme.
The committee recommends that
the government assist those who invested in the Professional Pensions
Pooled Superannuation Trust (PPPST), and were induced to move their funds to
the ARP Growth Fund.
Recommendation 2
5.80 The committee recommends that consideration be given
to improving the active detection of investment fraud through systems that can
identify 'outlying' patterns in investment performance. To this end, the
committee encourages partnerships between the regulators and experts in the
private sector.
Recommendation 3
7.6 The committee recommends that the Australian
Taxation Office include a clear, understandable, large print warning on its
website that self managed superannuation fund trustees are not covered in the
event of theft and fraud. This warning must be effectively communicated to all
existing Self Managed Superannuation Fund trustees through the guidance
material of the Australian Securities and Investments Commission.
Recommendation 4
7.8 The committee recommends that the guidance material
provided by the Australian Taxation Office for Self Managed Superannuation Fund
investors clearly state the difference between the protections and compensation
arrangements for investors in funds regulated by Australian Prudential
Regulation Authority as distinct from the limited protections available to Self
Managed Superannuation Fund investors.
Recommendation 5
7.17 The committee acknowledges the Future of Financial
Advice reforms, particularly the provisions addressing conflicted remuneration.
Nonetheless, it recommends that ASIC conduct a specific and detailed
investigation of both planners' and accountants' advice to SMSF investors in
Trio Capital. This investigation must examine what information was provided to
these investors regarding their duties and responsibilities, and whether they
were informed—either verbally or in writing—that they are not entitled to
compensation in the event of theft and fraud.
Recommendation 6
7.26 The committee recommends that the government
consider whether current processes are adequate when there is a change of
ownership or control of a company which holds an Australian Financial Services
Licence, or whether there is a need for more detailed scrutiny of the new
owner.
Recommendation 7
7.35 The committee recommends that the government investigate
options to improve the oversight and operation of compliance plans and
compliance committees. In particular, this investigation should focus on the
need for:
- more detail to be included in compliance plans;
- qualitative standards by which compliance plan
auditors must conduct their audits;
- liability for the responsible entity and its
directors for any contravention of the compliance plan, rather than only for
material contraventions, as is currently the case;
- legislative requirements as to experience,
competence or qualifications for compliance committee members;
- regulatory or member oversight of the appointment of
compliance committee members;
- an approval process for compliance plan auditors so
that ASIC has the powers to remove or impose conditions on such approval; and
- governance arrangements to be clearly stated in
relation to the proceedings of the compliance committee.
Recommendation 8
7.44 The committee recommends that as part of its review
of regulatory arrangements relating to custodians, ASIC should consider
changing the name 'custodian' to a term that better reflects the current role
of a custodian. This new term—reflecting the limited role of custodians—must be
used in Product Disclosure Statements.
Recommendation 9
7.56 The committee recommends that the government release
a consultation paper to investigate the best mechanism for a responsible entity
of a registered managed investment scheme to disclose its scheme assets at the
asset level. The objective must be to enable scheme members to legally require
specific information on the portfolio holdings of the registered managed
investment schemes in which they have invested.
Recommendation 10
8.13 The committee recommends that the Australian
Securities and Investments Commission provide all necessary funding for PPB
Advisory to pursue its investigation to a full conclusion, including where
necessary conducting examinations on oath of figures such as Mr Jack Flader and
others it considers necessary as part of the investigation. The committee
recommends that ASIC fund the phase 2 investigation by PPB Advisory as a matter
of urgency.
Recommendation 11
8.26 The committee recommends that the Australian Federal
Police, in cooperation with the Australian Securities and Investments Commission
and the Australian Prudential Regulation Authority, pursue criminal
investigations into—and, where applicable, criminal sanctions against—the key
figures responsible for defrauding investors in Trio as a matter of high
priority.
Recommendation 12
8.36 The committee recommends that the government
investigate the options for a scheme to recover assets from those found to be
personally involved in fraud and theft, with the proceeds to go to those found
to have been defrauded.
Recommendation 13
8.37 The committee recommends that the Australian
Prudential Regulation Authority conduct an internal assessment of the adequacy
and timeliness of its checks to monitor the ownership of superannuation
vehicles. This process must review why key 'trigger points' in events that led
to the collapse of Trio Capital were not identified.
Recommendation 14
8.38 The committee recommends that the Australian Federal
Police consider the options to create an organisational focus on the matters
pertaining to superannuation fraud. This should occur in close consultation
with the Australian Crime Commission given its work in coordinating Task Force
Galilee.
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