November 2018

Brace Yourself for New 'Seller Beware' Laws

FinaMetrica Pty Limited - Tuesday, 27 November 2018

New rules that will make financial advisors and product issuers directly liable for ensuring financial products are only sold to suitable customers are progressing through Australia's parliament. 

This shift in responsibility from 'buyer beware' to 'seller beware' comes with wide ramifications. Similar laws in the UK are causing huge change at all points in the financial product supply-chain. 

Under the rules financial products must have defined 'target markets' — consumers for whom the product is suitable. Advisors must accommodate and reflect those target market definitions when making product recommendations. Selling a product outside its target market is possible, but requires extensive justification and comes with considerable risk for the advisor.    
The legislation is called the Corporations Amendment (Design and Distribution Obligations and Product Intervention Powers) 2018.

The legislation and explanatory notes are here: https://www.aph.gov.au/Parliamentary_Business/Bills_Legislation/Bills_Search_Results/Result?bId=r6184

The proposed regulations have been circulated for comment and are here: https://treasury.gov.au/consultation/c2018-t337145/ 

The legislation has passed through a senate committee inquiry, and is now on its way back to the House of Representatives. Given the wide-ranging consumer protections built into this bill it could form part of the government response to the final report from the banking royal commission in early 2019. 

PlanPlus Global's CEO, Shawn Brayman, says the new rules acknowledge that most clients lack the abilities and knowledge needed to evaluate financial products and plans – no matter how much disclosure occurs. 

"In this new world product issuers and advisors are always responsible for ensuring suitability — and directly liable for any mis-selling" said Shawn. "Australians haven't yet recognised the tremendous significance of these new financial suitability laws, which turn conventional wisdom about who is liable for what on its head". Read more here: Wealth Industry Unprepared.

Introducing the Cazenove Capital Model Portfolio Service

FinaMetrica Pty Limited - Thursday, 22 November 2018

We are pleased to announce that the Cazenove Capital Model Portfolio Service is now mapped to the FinaMetrica risk tolerance scores. The portfolio is managed by Steven Rooke and his team.

The Model Portfolio Service is a discretionary investment management service that consists of a suite of risk-profiled portfolios, each aiming to deliver strong risk-adjusted returns.

This service is for advisers looking to outsource investment management in a platform environment, servicing clients who may not need a bespoke service as it would not be cost-effective.

Cazenove Capital is focused on preserving and growing the value of your clients' wealth after inflation, in a tax and cost-efficient manner. Their investment philosophy is underpinned by two key factors: an understanding of the business cycle and its impact on different asset classes and underlying investments, as well as a strong belief in the merits of diversification.

Key features:

• Portfolios consist of unit trusts, OEICs, ETFs and investment trusts
• Active/passive models available
• Available through third party platforms
• Optional additional regular contribution of £500 per month
• Annual Management Charge of 0.30% ex VAT
• Competitive ongoing charges on underlying holdings
• Regular rebalancing
• Available in a range of tax-efficient wrappers such as ISAs