Funds managers will no longer need to prepare annual financial statements for trusts, should a proposal by IFSA’s freshly-named ‘Service & Efficiencies’ sub-committee be adopted by Government. The proposal arose from a forum the Association held in April, in partnership with Conexus Financial, the publisher of Investment & Technology. The sold-out forum of more than 50 IFSA members decided that waiting for “transformational” industry-backed processing engines was fruitless, and that “small simple things” were needed to kickstart the drive to reduce waste, remembered the general manager of advice and private banking for BT Financial Group, Geoff Lloyd, at a session of last month’s IFSA Conference.


The abolition of annual financial statements as we know them was deemed an obvious place to start. “A few of us who’ve grown up in the industry think fondly of the ramp up to June 30, and everyone piling in until 3 or 4 am, after waiting for that final unit price to come through. So you’d prepare the statements, print them and mail them out, so your investor might have a look at them two months later. But in this day and age, how many unit prices would you have signed off on since then? What do you actually achieve from all of this work and expense?” The requirement for an annual financial statement appeared in Trust Law in 1982, Lloyd reminded delegates, prior to Corporate Law, continuous disclosure requirements and daily unit pricing, all of which had removed the need for them in his opinion.

IFSA has estimated the preparation and distribution of annual statements costs the managed fund industry $60 million a year, even after the 2008 relief from the need to mail out statements to all investors. IFSA’s subcommittee is preparing a draft paper on the regulatory change for October, which will be disseminated to members “to see what risk, if any, there is to end investors in removing the statements in their current form… and whether an abridged version of the statements would suffice.” The sub-committee’s next target is the torturous process required to consolidate superannuation funds, which has left the average Australian with three different super accounts.

Even though 40 per cent of Australians would like to consolidate, fewer than 6 per cent complete the process once they have started, Lloyd said. Three of the six steps they must take to consolidate funds could be performed within the funds themselves, Lloyd said. Once a member has changed employer, prompting the decision to consolidate, have called their funds and filled out a transfer request, all the member verification, certification and acknowledgments to the departed funds that follow could be performed by the ‘to’ fund. What currently takes two to three hours of labour over a period of 12 weeks could become one hour over one week, Lloyd said.

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