Call to pulp forestry investment offer
A PUBLIC warning has been issued against replying to an unsolicited investment offer from Prime Forestry Group, a Swiss organisation with a return address in London.
According to the Australian Securities and Investments Commission, Prime has illegally mailed out an offer to Australians in breach of the Corporations Act.
Prime does not hold an Australian financial services licence to offer or operate an investment scheme in Australia.
ASIC director of Consumer Communication Michael Dunn said: "ASIC urges anyone receiving this invitation to pulp it, shred it or otherwise recycle it".
"That’s all its worth without the backing of an Australian financial services licence."
Following public complaints ASIC contacted Prime. Prime has now told ASIC it has ceased offering its products in Australia."
"Meanwhile, because the illegal offer has been made, it’s important to issue a public warning," Dr Dunn said.
"This offer could appeal to people looking for socially responsible investments, since it claims to offer an ‘environmentally friendly business model", suitable for investing towards your children’s education.
"Prime’s glossy invitation offers a return of 14 per cent a year or more. Prime’s offer goes on to say retirement and educational savings must be protected in a conservative manner.
However, the return it claims to offer seems far too high to be described as ‘conservative’ in today’s market."
Review into eligible rollover funds released
MOST Eligible Rollover Funds reviewed need to improve their disclosure to their members about fees and charges, a study by the Australian Securities and Investments Commission has found.
The review found that while very few ERFs deducted fees from a member’s account balance or benefit, most deducted fees before the investment allocation to members was made.
In one case these fees amounted to 5 per cent of the assets of the fund annually.
Disclosure about these fees was not always clear or ineffective and, in a few cases, was potentially misleading.
ASIC also found deficient processes for ensuring that disclosure was provided to members who were entitled to it – that is locatable members.
While superannuation funds do not have to provide disclosure documents to "unlocatable members", in most ERFs disclosure was being withheld for "lost members".
Trustees must make reasonable efforts to locate a member before withholding disclosures from them.
ASIC executive director of financial services regulation Ian Johnston said that as a result of the report, ASIC had observed an improvement in industry disclosure standards going forward into financial services reform.
He said ERF trustees also revisited compliance procedures for identifying unlocatable members.
"ASIC recognises the commitment shown by trustees to improve the standard of compliance with transitional superannuation disclosure requirements, particularly as the industry moves to a new disclosure regime that contains stronger requirements for the disclosure of fees."
Mr Johnston said the report identified a supporting role for consumer education to raise awareness about the role of ERFs, such as when benefits can be transferred to them and the implications of a transfer.
"While ERFs play an important role in accepting superannuation unwanted by other superannuation trustees, ASIC believes that most consumers would be unaware that their superannuation benefit can be transferred into an ERF without their consent," he said.
"To overcome this, ASIC believes consumers must be made aware of the advantages of taking an interest in their super debt.
"ASIC will be undertaking some targeted consumer education in this area to highlight the importance of notifying a change of address and encouraging consumers to take a more active role in deciding how to manage their money if it is in an ERF."
An ERF is a publicly-offered superannuation fund that accepts members who are automatically transferred from other funds.
Generally, ERFs accept members who are usually lost, or have not made decisions about where they want their superannuation monies to be transferred, although they can operate similar to other superannuation funds.
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