# Banksia Financial Group bites the dust



## baby_swallow (26 October 2012)

Another one bites the dust....

http://www.news.com.au/business/com...-financial-group/story-fnda1bsz-1226503478426


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## ASICK (2 November 2012)

http://www.portstephensexaminer.com.au/story/424934/banksia-investors-wont-lose-the-lot/

"The Saturday Age believes a sudden realisation by a new management team about a long-term decline in the quality of loans, rather than a single large event, triggered the decision to freeze assets."

Maybe I misunderstand what a single large event is, but I would have thought a "sudden realisation" is in itself a single large event.

Darn, double speak is hard to decypher.

http://www.smh.com.au/business/untimely-death-clouds-banksia-probe-20121101-28mxn.html

Only the tip of the iceberg.


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## ASICK (3 November 2012)

*Banksia: The Tip of the Iceberg*

http://www.theaustralian.com.au/bus...nd-banksia-crash/story-fn91wd6x-1226507012584

"A second mortgage fund controlled by Banksia, the Cherry Fund, was swept into receivership yesterday, leaving another $10 million of ordinary investor funds in limbo following the collapse of $650m stablemate Banksia Securities last Thursday. ... The Cherry Fund was placed in administration because the company was unlikely to be able to meet an expected run on redemptions following the collapse of Banksia Securities, Mr McGrath said. A third fund, the $158m Banksia Mortgage Fund, remains afloat."

and

"Directors of Cherry Fund and auditor Mr Sinnott also signed off on the group's accounts late last month, raising no concerns about its financial viability.  According to Cherry Fund's accounts for the year to June, it held $10.8 m of investor funds, was owed $11.3m from entities to which it had lent money and had equity of $1.7m."

What a surprise !

"Analysis suggests Banksia Securities was holding $84m worth of repossessed properties at the time of its collapse and the value of those properties had not been adequately recorded in the group's books. A further $105m worth of loans were overdue, $74m by more than three months. However, the company appeared to have a provision for bad and doubtful debts of just $2.3m."

When they go, it seems to be always like this !

http://www.smh.com.au/business/let-down-by-banking-on-banksia-20121102-28pqr.html

The solicitors' trust accounts - money going to waste (no interest) - yes, of course a number of solicitors saw opportunity - and of course, banks closing country branches.

Banksia's predecessor business was started by Patrick Godfrey in 1968, called Kyabram Housing Investments. In 1999 this merged with several small investment companies to form the Banksia Financial Group.

One of the companies involved in the roll-up was Statewide Secured Investments, formerly Goulburn Valley Housing Loans, set up by Kyabram law firm Dawes & Vary. Another was Hedon Investments, a finance group set up by Ballarat law firm Heinz and Partners.

''It started with a solicitor's office,'' said Michael Polan, a councillor and former mayor of nearby Shepparton. ''People felt secure with that. It wasn't so much about chasing a higher interest rate. It was about personalities and relationships that built up over time.''"

and:

''Back in those days, the end of the Earth was Essendon. The law firms saw an opportunity to be able to provide housing finance,'' he said."

Other solicitors saw opportunities elsewhere:

http://moneymagik.com/trilogy_history.php


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## ASICK (3 November 2012)

*ASIC - The Corporate Undertaker*

http://www.businessspectator.com.au...-report-pd20121102-ZN757?opendocument&src=rss

"“On the conduct side, we’ve undertaken intensive surveillance of the industry, particularly over the last 12 months," he said. 

"In relation to Banksia they were one of the entities we had been surveilling. We had been proactive with the trustees.”"

Trouble is, ASIC is NOT a prudential regulator - for ASIC, it's form, NOT substance.   When ASIC says it's been monitoring an entity, it means "ASIC is monitoring the compliance of the entity, NOT the substance (profitiability/value) of the entity".

Sad thing is that investors in Managed Investment Funds' ("MIFs:/"schemes") mostly all fall for the commonly held (and false) belief that the industry is well-regulated.  The truth is that the industry is not well-regulated and ASIC does not have the mandate nor the interest to concern itself about investor losses.


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## ASICK (3 November 2012)

*Mezzanine Lending?*

http://www.theaustralian.com.au/bus...-latest-disaster/story-e6frgac6-1226509487836

"Based at Kyabram in regional Victoria, the company's modus operandi was similar to the raft of other property mortgage organisations that have collapsed in recent years. It borrowed at rates significantly more attractive than term deposits and lent to property developers.

A large number of investors, many of them unsophisticated when it comes to finance, believed their money was being invested in real estate, or at least secured over real estate.

To a certain extent that was true. But if the experience of its collapsed competitors is any guide, the loans ranked way down the list, often as second or third mortgages which essentially made them high-risk mezzanine finance."

(emphasis added)

I guess things aren't looking good, and wlll probably be looking quite a lot worse if the funds have bank facilities.  Repayment of bank facility in today's market would doubtlessly mean more losses if impairments are inadequate (which so often is the case).  I'd also guess that since two of the funds are so troublesome, the third fund is probably going to follow along on  the same path to disaster.   

Geez, the investors must feel relieved the auditors were in there looking after their respective interests .. phew !!!


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## ASICK (3 November 2012)

*ASIC: Coporate Undertaker*

http://www.asic.gov.au/asic/asic.nsf/byHeadline/Banksia-Securities-Limited?opendocument

Taskforce (hohoho - really quite a funny term when applied to ASIC):
http://www.asic.gov.au/asic/asic.ns...egulation+of+unlisted+debentures?openDocument

The Undertaker:

http://www.smh.com.au/business/more-powers-but-is-asic-up-to-the-job-20100604-xkta.html

"Talk to people at ASIC and you become familiar with D'Aloisio's metaphor of ASIC's role being one of attending a car crash.

"In any situation, I often use the example of the car accident or the train crash, where you turn up, you have a look at it, and clearly people have been hurt; there was a crash," he said.

"You can then look at focusing on who to blame, who did the wrongdoing, etc, but you also have got to look at those that are injured and how you can assist them, particularly retail investors.""

Typo passes auditor:

http://www.heraldsun.com.au/news/vi...dog-investigates/story-e6frf7kx-1226507012610

Worth a look:

http://www.youtube.com/watch?v=uw_Tgu0txS0

Harry Markopolis (who found out about Madoff) couldn't convince the SEC (US ASIC equivalent) about Madoff - describes the SEC as coming in after the crash and taking away the 'bodies' .. really worth a look:

http://www.youtube.com/watch?v=PG8sIAsT-bg&feature=related
http://www.youtube.com/watch?v=iR1ctcYXx7c&feature=relmfu

More links:

http://www.search.news.com.au/relat...?us=ndmnews&sid=2&as=NEWS&ac=search&r=related


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## ASICK (4 November 2012)

http://www.asic.gov.au/asic/ASIC.NSF/byHeadline/Our role

ASIC's role.

"The laws we administer give us the facilitative, regulatory and enforcement powers necessary for us to perform our role. These include the power to: (I've highlighted ASIC's main actions)

- register companies and managed investment schemes 
- grant Australian financial services licences and Australian credit licences - register auditors and liquidators 
- grant relief from various provisions of the legislation which we administer 
- maintain publicly accessible registers of information about companies, financial services licensees and credit licensees 
- make rules aimed at ensuring the integrity of financial markets 
- stop the issue of financial products under defective disclosure documents 
- investigate suspected breaches of the law and in so doing require people to produce books or answer questions at an examination 
- issue infringement notices in relation to alleged breaches of some laws 
- ban people from engaging in credit activities or providing financial services 
- seek civil penalties from the courts 
- commence prosecutions - these are generally conducted by the Commonwealth Director of Public Prosecutions, although there are some categories of matters which we prosecute ourselves."

ASIC's Statement of Intent:

http://tinyurl.com/b59egf7

Information for Consumers:

http://www.asic.gov.au/asic/asic.nsf/byheadline/ASIC-and-consumers?openDocument

ASIC is not interested in whether an investment is succesful or not - it's not interested if a manager is negligent, hopeless, or even incompetent.   The manager will get along nicely with ASIC providing it complies with applicable laws.  

I'm posting this in the event Banksia investors come with a mind-set thinking that ASIC is able to ride to the rescure.   ASIC may bring a legal action if loss has been caused by a breach of compliance or a fraud.

I think it's really necessary to keep driving home the message that ASIC is NOT a prudential regulator - ASIC is not concerned by mere loss of investments.


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## prawn_86 (4 November 2012)

ASICK said:


> investigate suspected breaches of the law




This is where ASIC are generally hamstrung imo, due to lack of resources and often the financial laws are quite ambiguous. But yes, ASIC dont care if you lose money, only if the people who lost your money were compling with all the laws/rules throughout their time


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## gav (4 November 2012)

ASICK said:


> ASIC is not concerned by mere loss of investments.




And nor should they be


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## ASICK (4 November 2012)

Spot on Gav.  Many of us come to these forums with a lot to learn.  At first we wonder where is ASIC?  We wonder why is it that we've done our dough and nothing happens to those who lost it for us? If investors in Banksia do wander onto the forum, then hopefully they'll learn the ropes quickly, and not waste time waiting for ASIC to come to the rescue.


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## Smurf1976 (5 November 2012)

ASICK said:


> "The Saturday Age believes a sudden realisation by a new management team about a long-term decline in the quality of loans, rather than a single large event, triggered the decision to freeze assets."
> 
> Maybe I misunderstand what a single large event is, but I would have thought a "sudden realisation" is in itself a single large event.



A common theme to most disasters, financial or otherwise, is a "sudden realisation" of a risk or situation which has existed for quite some time.

I think it's just a human trait that we're quite good at denial and ignoring risk until it's too late, usually involving an assortment of "reasons" why the risk won't eventuate or can be mitigated. 

Then somebody wakes up to the situation being far worse than most had assumed....


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## Julia (5 November 2012)

> ASIC is not concerned by mere loss of investments.





gav said:


> And nor should they be



+1.  Once again it's all about risk/reward.
If people choose to invest in non APRA regulated organisations in pursuit of higher returns, they need to clearly understand that they are taking on more risk.  I can't think of too many instances where higher returns don't involve higher risk.


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## prawn_86 (5 November 2012)

Julia said:


> If people choose to invest in non APRA regulated organisations in pursuit of higher returns, they need to clearly understand that they are taking on more risk.  I can't think of too many instances where higher returns don't involve higher risk.




Yes i guess in this case it comes down to if investors were legally made aware that they were investing in a scheme that was not APRA regulated.

I don't know if this is or isnt the case as i have not followed this story much


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## ASICK (5 November 2012)

Julia said:


> +1.  Once again it's all about risk/reward.
> If people choose to invest in non APRA regulated organisations in pursuit of higher returns, they need to clearly understand that they are taking on more risk.  I can't think of too many instances where higher returns don't involve higher risk.




Good for you! Well, the truth is that many investors who invested with these MIFs (including myself)  didn't understand the risks.  It's fine for you guys who have the wherewithall to understand everything about risk, but joe and joan public didn't understand .  We thought the industry was well regulated and secure, but now we find it's not.  Such is life.


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## ASICK (5 November 2012)

prawn_86 said:


> Yes i guess in this case it comes down to if investors were legally made aware that they were investing in a scheme that was not APRA regulated.
> 
> I don't know if this is or isnt the case as i have not followed this story much




Truth is that the tens of thousands of investors were just plain stupid? right? We didn't know about risk - we didn't know about APRA - how dumb of us, right?  It was all our fault because there was nothing to lead us to believe the risk was so high, right? I don't argue that, I agree. Now, with that point well understood, time to move on to help those who are coming to grips with loss as we speak.

Here's some more links :

http://www.businessspectator.com.au...es-repo-pd20121029-ZJS3R?OpenDocument&src=rab

"... Banksia was permitted to continue raising money from investors because existing laws only required the company to disclose its lack of capital in a 31-page prospectus.

In its latest prospectus, Banksia reported an equity to total liabilities ratio of 3.6 per cent at the end of June 2011, which was significantly below the minimum equity ratio benchmark of eight per cent, as recommended by ASIC, according to the AFR.

Receivers took control of Banksia on Thursday after its newly-installed chief executive launched a review that suggested losses on its portfolio of property loans would be higher than forecast...''

http://tinyurl.com/c5rhph6

''... The common goal is, and will remain, that investors can have confidence in securitised products, that the risks are both reasonable and reasonably disclosed, and that securitisation can then be an effective contributor to
economic growth....''

http://www.smh.com.au/business/unti...ksia-probe-20121101-28my6.html?skin=text-only

''... Banksia's collapse has put the spotlight back on a sector that is very risky and which has had more than its fair share of collapses in recent years.

It is not hard to see why. The sad reality is this sector of the finance industry is poorly regulated. It is regulated by ASIC and unlike the banks the funds don't have to comply with mandatory capital requirements.

As long as the funds disclose that they don't meet suggested capital ratios or liquidity levels in their prospectus that's OK, according to ASIC.

Put simply, if a debenture fund is undercapitalised, there is nothing ASIC can or will do if it has been disclosed in the prospectus.

Another problem is if an investor rolls over a debenture the fund isn't required to issue a new prospectus, which creates an even bigger information vacuum that the investor is operating in.

These funds can also use the word deposit as there is no law that prohibits the use of that term. The upshot is Banksia was able to offer ''at call'' deposits as long as it mentioned in its literature that it was a non-bank.

There is at least one other bank that is in trouble. Its defaults are high, its fees are high and it has been involved in reckless lending. The concern is that valuers may not be able to get PI insurance to write valuations for non-bank lenders. If that day comes, where will that leave the investors? ...''

http://www.theaustralian.com.au/bus...-spot-on-banksia/story-fn91wd6x-1226509496526

''... Mr Medcraft said the corporate regulator had done everything in its power to enforce the disclosure and conduct rules for debenture funds, including Banksia, and there was an obligation on investors to be careful about the products and companies they invested in.

"It is not a blind spot," he said. "There is a presumption that investors do read the prospectus, that investors do understand the risks that they are taking.". ...''

http://www.abc.net.au/am/content/2012/s3622213.htm


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## McLovin (5 November 2012)

prawn_86 said:


> Yes i guess in this case it comes down to if investors were legally made aware that they were investing in a scheme that was not APRA regulated.
> 
> I don't know if this is or isnt the case as i have not followed this story much




Was there a legal requirement to disclose that fact?


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## prawn_86 (5 November 2012)

McLovin said:


> Was there a legal requirement to disclose that fact?




I have no idea, that is where ASIC comes in.

As i said, i haven't follwed this collapse closely


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## Julia (5 November 2012)

ASICK said:


> Good for you! Well, the truth is that many investors who invested with these MIFs (including myself)  didn't understand the risks.  It's fine for you guys who have the wherewithall to understand everything about risk, but joe and joan public didn't understand .  We thought the industry was well regulated and secure, but now we find it's not.  Such is life.



Sorry, ASICK.  Like Prawn, I haven't followed all this closely and haven't read all your posts.   Didn't realise you were an investor.



> Banksia is simply the latest in a litany of disasters within the sector during the past six years that include names such as Westpoint, Bridgecorp, Fincorp, Australian Capital Reserve, Provident Capital, City Pacific and MFS.



from "The Weekend Australian".
And Banksia won't be the last.

The role of APRA became more widely known when the government introduced its guarantee of deposits in response to the GFC to counteract potential liquidity and lending problems.

The guarantee only applied to APRA regulated institutions, eg banks, building societies, credit unions.

I guess my main point was the risk/reward aspect, rather than specifically the APRA connection, in that when we choose the higher reward we need to understand that it's higher for a reason, i.e. it's less safe.

With falling interest rates, I won't be surprised if there are more failures to add to the list above.

(I did notice, ASICK, from the article in "The Weekend Australian" that it's possible investors may receive as much as 70c in the dollar back, eventually.)

Good luck.  We've all made decisions with what we knew at the time that turned out to be less than great.


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## ASICK (5 November 2012)

Well, actually, it's good luck to Banksia investors, in fact to all investors in screwed up MIFs.  I did my dough in City Pacific's First Mortgage Fund (at 58), now the Trilogy Pacific Mortgage Fund ("PFMF").  I'm what some might regard as an early retiree (at 40) - heck I even went and got a law degree because I was bored - worked as a barrister for six months until boredom set in again - or perhaps it was becauase my master at the bar was 20 years younger than me.  Nevertheless, I've never considered myself a stupid person - I know a lot about a lot of things, BUT ... none of it protected me from being gullible.

I thought the worse that would happen to me was paying $50 for a $5 camera to a spruiker on the streets of London, or that I might only break even on the sale of a property, but little did I know that worse lay in store for me. I believed that the legistative framework and regulation must be such that my investment would not be put at risk, but under than substrate of "security" lay an accident just waiting to happen.  Heck, City Pacific used the Public Trustee of Queensland (PTQ) - that PTQ logo sure made investors feel secure.  I've felt the anyst on the recognition that bad fortune had beset ME: It doesn't always happen to other people.

I now know that in many MIFs, valuations of assets do not hold when assets are sold, and I do know that in many MIFs, accruals (interest receivables) are, in many cases, unable to be recovered - yet, such valuations and accruals can appear in accounts year after year, and I do know that in many cases, managers are able to make fees on those inflated accounts, and I do know that in the end, it is investors who suffer.  I know to read RG45 Annexure A Table "H" LVR ranges together with unit price - yes, I have learnt a lot.

In case it's escaped readers minds, many investors in these MIFs sunk their lives' savings in (I did not)  because they NEEDED the income to live a self-sufficent life in circumstances when interest rates were  tumbling.  I guess I'm a little thin-skinned about the blame going to investors and the continual harping about risk, risk rising with return, and ignornace.  

Yes, it's our fault, we know that -really, it's a given.  I doubt whether there's a single investor who doesn't blame themselves - they know - some are probably very ashamed of what they did.  Some have to come to grips with what's happened - to some it's a loss as severe in consequence as the loss of a life-partner.

When I was first caught up in the PFMF, I didn't know much about the Corporations Act or MIFs - in fact, I didn't even know that unitholders actually owned the fund.  Unless one practices a particular branch of law, that branch can be as alien as a moonscape: Corporations law is much closer to earth for me today, much closer than before.

When Trilogy took over the fund, the rot continued.  Even after a much-touted so called "Asset Review" which adjusted the fund's unit price from $0.64 to $0.48, the unit price continued to tumble at such a rate that it'll be a miracle if we end up with a cash return of $0.15/unit.

If one looks at the Equititrust - the (continually dropping) expected return [$0.16 - $0.23]  is a drop in the bucket to what investors originally anticipated. http://equititrust.com.au/Pdfs/Receiver/Receivers Reports - 20121004 - 8th Report to Investors.pdf

I think LM investors are in for shock - a drop to about $0.50 is possible.  The accounts are late and no RG45 has been disclosed. (although I note from experience, Trilogy is capable of worse)

You say they're anticipating $0.70 in Banksia - well, they might say that - but when the rubber hits the road, and asset recovery falls far short, and when costs are loaded in, I'd say $0.70 will be a fantasy figure (I say that from past experience, not from actual account knowledge).

And there will be more - there will be over 100,000 investors who'll lose big time - and while the government protected the (too big to fail) banks with $1m deposit guarantees (at that time, now $250k), it left the MIF sector fall to the wolves.  I guess the goverment thinks it's best to have a "little" mess, not a BIG one.

So, sorry for being thin-skinned, but it's just the way the whole thing's made me.


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## Julia (5 November 2012)

ASICK said:


> Well, actually, it's good luck to Banksia investors, in fact to all investors in screwed up MIFs.  I did my dough in City Pacific's First Mortgage Fund (at 58), now the Trilogy Pacific Mortgage Fund ("PFMF").  I'm what some might regard as an early retiree (at 40)



Apparently I was in error in concluding you were a Banksia investor.

I expect you're indeed over anyone commenting on risk/reward.  Doesn't make it less relevant, however, as it doesn't seem to have occurred to some investors.


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## ASICK (6 November 2012)

*Gambling is Gambling*



Julia said:


> Apparently I was in error in concluding you were a Banksia investor.
> 
> I expect you're indeed over anyone commenting on risk/reward.  Doesn't make it less relevant, however, as it doesn't seem to have occurred to some investors.




I'll try again - it's a given.  Many investors in badly damaged MIFs have learnt a lot these past years.

Here's a posting in a PFMF forum from yesterday, "_For me the main lesson is to never believe anything you read in a prospectus.  And don't delude yourself that there is any govt agency that gives a damn whether organisations comply or not.  Having understood these two facts, your investment options become much narrower." _(Ian N.)

(sadly, many haven't learnt much at all, but many of those are unlikely to be investors again due to age and lack of capital)

Regardless of blame, the impact on our community is enormous:

http://www.news.com.au/national/eld...l-group-collapse/story-fndo4cq1-1226511022862

''... the group collapsed when a key subsidiary, Banksia Securities, was placed in receivership late last month owing investors $650 million.

Of this amount, about $300 million is made up of deposits that range between $100,000 and $500,000. Another $300 million comprises deposits less than $100,000. All up, $650 million in investor funds have been frozen in the group's downfall. ...''

''... Warrnambool couple Chris and Eleonora Symmonds have two-thirds of their life savings invested in Banksia. The couple opened a fixed-term investment account in 2002 on the advice of a financial planner. At the time of the collapse it was paying 5.5 per cent. "*We went there because we did not want to get caught out by the stockmarket so Banksia was recommended to us as a more secure investment - we weren't chasing high returns," *Mr Symmonds, 58, said.

"I know we won't get it all back and we are at an age where we can't make it all back so we will have to live with that."

The couple, who get a carer and disability payment, are frustrated that Centrelink continues to count the frozen Banksia deposit as part of their assets. ...''  (emphasis added)

Let's not forget regulation:

http://afr.com/p/personal_finance/s...sson_investors_you_are_sRwTQeTdekT71dJdj9nobP

''... After the Westpoint failure the Australian Securities and Investments Commission (ASIC) did not overhaul the legislation governing debentures issued by unlisted non-ADI lenders, but rather it implemented an “if not, why not” regime. This involved setting eight benchmarks, including minimum capital ratios, loan-to-value ratios on specific loans and disclosures about funding and loan profiles.

But missing the benchmarks doesn’t prevent institutions from raising the funds. It only means they have to disclose this to investors in the prospectus.  This puts the onus on the individual investor to identify the risks of the non-regulated institution that has issued the debenture.

The mere fact the institution has been approved to raise funds is not an endorsement that it is safe.

There is a strong case to be made for regulation to be changed so that benchmarks are enforced and companies that don’t comply are shut out of the funding markets.

In the past week ASIC has announced it will set up a taskforce to look into the debenture market, where 18 issuers are still raising money in this format. Of these, 12 miss ASIC’s benchmarks.

*In the interim, investors and their advisors will be well served to ensure they conduct thorough research before committing a cent to non-APRA regulated lenders.[/B] ...''  (emphasis added - really, every part of this except should be emphasised to an equal extent)*


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## ASICK (7 November 2012)

*"a degree of cash on hand"*

http://www.abc.net.au/news/2012-11-06/hope-remains-for-banksia-investors/4355422?section=vic

"The chairman of the working group, Deputy Premier Peter Ryan, says the receivers cannot say what percentage of investors' money will be returned."

So much for the 70% return. It's always like this - hope, then hope dashed.


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## No Trust (7 November 2012)

*Billions lost, elderly exploited*

Billions lost, elderly exploited
Niall Coburn 
Financial Review
7 November

"Equititrust, City Pacific, MFS, LM Investments, Banksia Securities and many more have all proved to be a dog of an investment. Corporate investigations have revealed that the investment model of such schemes was in many cases materially flawed, lacking the right risk and compliance strategies."

http://afr.com/p/opinion/billions_lo...m0mE8K8eMJTquO


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## k.smith (7 November 2012)

*Re: Billions lost, elderly exploited*



No Trust said:


> Billions lost, elderly exploited
> Niall Coburn
> Financial Review
> 7 November
> ...




I see that the AFR article No Trust linked in post 23 is now available to read online

http://afr.com/p/opinion/billions_lost_elderly_exploited_JzBSK38sm0mE8K8eMJTquO
''...You only have to read the June 2011 Corporate Advisory Committee paper that reviewed managed investment schemes to understand that the legislature and politicians had no idea of the complex tiger they were unleashing on an unsuspecting investing public....''

How were all the hundreds and thousands of elderly retirees supposed to understand the "complex tiger" if the legislature and politicians had no idea?

The discussion paper referred to in the article is 120 pages long 
http://www.camac.gov.au/camac/camac.nsf/byHeadline/PDFDiscussion+Papers/$file/MIS_DP_Jun11.pdf


The report which came out a year later is 205 pages long
http://www.camac.gov.au/camac/camac...al+Reports+2012/$file/MIS_Report_July2012.pdf


Pages and pages of issues, submissions and recommendations... is that to make investors feel comfortable that something is being done?
Because this isn't about a few reckless investors chasing a few dollars more.... it is about the lives of hundreds and thousands of elderly people who trusted a "complex tiger" and now find themselves trapped and frozen in schemes where information about the future of their investments is scant, and where the decisions that they are asked to make are a whole new series of complexities.
I think that all the talk in the world about well informed investors and a fair and transparent marketplace is worth nothing while these collapses keep happening and while this situation is continuing.

Why weren't the laws changed after the 2005 collapse of Westpoint when an ASIC investigation had found that the $8billion sector was "fraught with risk?"
Why weren't the laws changed after the 2008 collapse of City Pacific First Mortgage Fund and the MFS Premium Income Fund?
Why weren't the laws changed after the 2010 collapse of Equititrust?
Why were these funds allowed to continue to advertise and entice investors when such risk as disclosed back in 2005 within the "sector" was identified ?

Obviously RG disclosures haven't been enough 
http://www.smh.com.au/business/untimely-death-clouds-banksia-probe-20121101-28mr4.html
''...
''The fundamental objective is to provide retail investors, and their advisers, with more investor information to make their decisions before they invest and then on an ongoing basis,'' ASIC's then chairman, Tony D'Aloisio, said.

The best that can be said about the ''if not, why not'' approach is that it is useless. The adage ''should have, could have, would have, but didn't'', applies to too many.

By not lobbying to change the law but leaving it in the hands of the entities to disclose in their prospectuses has meant the ball has rolled on for a further five years, taking a number of victims with it...''



I wonder who will be next?


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## Julia (7 November 2012)

*Re: Billions lost, elderly exploited*



k.smith said:


> Why weren't the laws changed after the 2005 collapse of Westpoint when an ASIC investigation had found that the $8billion sector was "fraught with risk?"
> Why weren't the laws changed after the 2008 collapse of City Pacific First Mortgage Fund and the MFS Premium Income Fund?
> Why weren't the laws changed after the 2010 collapse of Equititrust?
> Why were these funds allowed to continue to advertise and entice investors when such risk as disclosed back in 2005 within the "sector" was identified ?
> ...



What sort of law do you want to see put in place?
Do you believe any organisations which are not APRA regulated should not be allowed?
Would just be interested in what level of restrictions you think should be imposed in some sort of attempt to save people from making uninformed decisions.


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## ASICK (7 November 2012)

This was an issue ASIC was struggling with (but I can't find the link again)  - it was about moving the "dial" to stricter regulation which would stiffle investment, or alternatively, the other way to less regulation and "bury" more investors: it seems to me that ASIC left it right where it was.  (since I can't find the original article, I've paraphrased the article as I remember it).

Some law changes which  I think are necessary:

1. A top limit of LVR re: loan/security asset of say, 61%.
2. No bank debt permitted by MIFs.
3. No investment in MIFs by super funds.
4. Cash accounting only by MIFs -  no accruals accounting.
5. Stricter oversight re: valuations of security properties.
6. No lending with mere vacant land as security  - that is, development must have began and approvals granted.
7. Discharged bankrupts not permitted as directors of holders of AFSLs.
8. No lending from MIF to companies whereby a director is a discharged bankrupt.
9. That once a fund is frozen, the court must appoint a receiver - that is, the manager must be ousted immediately.
10. NO related party transactions by the responsible entity.
11. A new definition of the what constitutes a "related party" which should include relationships with all directors and key personell of the Responsible and any appointed investment/asset manager.
12. Full disclosure of security properties.
13. A big notice on the front of each PDS - "This PDS is NOT Worth The Paper it's Written on"


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## k.smith (7 November 2012)

*Re: Billions lost, elderly exploited*



Julia said:


> What sort of law do you want to see put in place?
> Do you believe any organisations which are not APRA regulated should not be allowed?
> Would just be interested in what level of restrictions you think should be imposed in some sort of attempt to save people from making uninformed decisions.




Interesting article today, very topical...

http://www.professionalplanner.com.au/regulators/asic-spruiks-need-for-advice-in-“complex”-future/
''....
The increasing complexity of the financial system and the growing regulatory perimeter are the two biggest challenges facing the Australian Securities and Investments Commission over the next decade....''

''...Front and centre for the regulator is superannuation, which is expected to grow to $3 trillion over the next decade and to $5 trillion the following decade.

“It will grow at twice the rate of the economy. This will increase ASIC’s regulatory perimeter as more investors come into the system and invest more money,” said Medcraft.

“This is a shift of savings out of the banking sector into the superannuation/funds management sector.

“The typical superannuation fund invests in equities, fixed income, property and cash. These are all products that that are regulated by ASIC.”

This growth in super will also have a significant impact on financial advisers, superannuation trustees, investment managers, custodians, research houses, credit rating agencies, auditors and accountants – all play a role in supporting investors in superannuation funds and all are regulated by ASIC...''

......


With so much investment shifting from the banking sector, imo the word "regulated" should be better clarified ....... ASIC is not a prudential regulator. 

It is the investor who bears losses if the scheme fails, not those who "..play a role in supporting investors in superannuation funds'' .

A PDS need to be simplified and in my opinion if a year twelve high school student cannot dissect and discuss such a document at length, average Mum and Dad investors haven't got a snowflakes chance... a large percentage of Mum and Dad investors of my generation never got to year twelve. When bank interest rates fall, it is the Mum and Dad investors who are the easy target for the glitzy, slick advertising by MIS funds. Remember the barrage of advertising that was in the newspapers around years 2000 - 2008.? I have just this week seen a few flyers spruiking  a "reliable interest stream" of nearly 9% and  a "benefit of experience" spruik to "weather financial downturn"  all while the full history of this company's past failures in it's other funds isn't disclosed. 

How will this sort of advertising be perceived by the next tranche of unsuspecting investors ? 

So as to what sort of laws i would like to see in place? 

Personally, I will never invest in such schemes again. In the position I now find myself, I don't have enough time left in my working life to recover from any potential losses in any investment that involves RISK. Furthermore, I will bore everybody I know about the risks of investing in these schemes.

My hard earned is now growing in term deposits at a number of APRA blessed banks. 

However, if it is to be that the "second tier" has a place in the economy, I would like to see a much better level of protection for the next wave of unsuspecting retail investors.

SMSF's should  only be able to invest in APRA approved investments. If SMSF's are designed to provide retirement income, this should be kept safe and reliable for the purpose for which it was intended.If you look at a fund's unitholder register, SMSF's abound... well they do in the registers that I have seen!

When a fund becomes illiquid, there should a mandatory option to wind up the fund  and the advantages and disadvantages of doing so should come from an independant source, i.e not from the manager. This issue is addressed in the CAMAC report. Hope it's implemented. Also hope the issues surrounding voting, poison pills in fund's constitutions which make replacing a Responsible Entity almost impossible, there all there in the CAMAC report.

The advertising of schemes should be overhauled. Just as the word "bank" is no longer allowed to be used in promoting a "non-bank" product, words such as "reliable" should be thrown out... why say something is reliable, and then disclaim it ? Words such as 'First Mortgage'' in a scheme that has a bank debt, which in turn is secured by a fixed and floating charge over the assets of the fund should also most definitely go. Investors in funds with bank debt stand SECOND behind the bank. 

As I have said, the PDS should be much clearer. Perhaps it should begin with the words  such as

.. The product you are about to invest in comes with a risk that you could lose ALL of your investment. In the event that this investment fails, you will not receive any help to recover your investment unless you manage to get together with the other investors in this product (at your expense) and find out that a law has been broken. ...''


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## ASICK (7 November 2012)

*Financial Disclosure*

It's not only the PDS, it's the financial returns, and it's the RG45s.

I'd be surprised if 5% of investors in MIFs understand the content of both financial returns and RG45s.   I'd be surprised if 5% even read one of them.  I know I didn't - at least I didn't read them until the PFMF went pear-shaped, and even then it took time for me to come to grips with the contents of same.

I'm confident that the majority of investors don't understand what accruals accounting is, and I'm sure that most investors have no idea of how to estimate the quality of unit price by reference to RG45 Annexure A, Table H.  

I listed a number of things that I'd like to see changed in the law, and I'd like to add a number of issues.

It should be mandatory for the fund's auditor to give a complete and detailed analysis of RG45 Annexure A, Table H in relation to the quality of the unit price - and that such analysis should be provided along with the RG45.

While accruals (interest receivable) is permitted in the fund - such figures should be highlighted SEPARATELY as monies NOT received - and where commissions and/or management fees are calculated on any accruals (receivable) amount, the amount so calculated should also be highlighted to inform investors that such commissions and/or fees are calculated on monies investors may indeed not recover.

Such accruals should also be shown as a percentage of unit price in order to disclose to investors the degree to which unit price depends on that non-cash item - the extent to which unit price may not be recoverable (to the extent of such accruals).

Many investors tend to fixate on unit price to the exclusion of all else - that is a BIG mistake that so many of us have made - and a BIG mistake so many of us continue to make.


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## Julia (7 November 2012)

k.smith and ASICK:  you both make some good points.

On SMSFs 







> SMSF's should only be able to invest in APRA approved investments. If SMSF's are designed to provide retirement income, this should be kept safe and reliable for the purpose for which it was intended.If you look at a fund's unitholder register, SMSF's abound... well they do in the registers that I have seen!




I disagree with this suggestion.  People taking on the responsibility of a SMSF should do so armed with a reasonable degree of financial literacy.  There has been this year a substantial increase in the fee paid by SMSFs to ASIC for its regulatory oversight.  As the owner of a SMSF, I have absolutely no idea what ASIC is doing for me in this regard, so it seems like yet another tax grab.

Further there has been a suggestion that an additional levy should be applied to SMSFs so that their members can be compensated in the event of their making decisions that go bad.
As someone who is very cautious and conservative in decision making I do not want to be subsidising people who are cavalier in the pursuit of higher interest rates.

All up, I think you can legislate to the point where ordinary people go nuts in frustration, but nothing, absolutely nothing will ever substitute for acquiring a basic level of financial literacy.
You can make PDSs as detailed as you like.  They can still absolutely fail to live up to what they claim.
It's up to the investor to sort out the reality of any opportunity.


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## k.smith (7 November 2012)

Julia said:


> ''...  People taking on the responsibility of a SMSF should do so armed with a reasonable degree of financial literacy.  There has been this year a substantial increase in the fee paid by SMSFs to ASIC for its regulatory oversight. ...''




reasonable degree???... like so many financial planners who got it so wrong?? SMSF are about providing security, and this should not be exposed to RISK, imo. In the "unlikely event" of the investment suffering losses (which in the case of hundreds and thousands of investors DID eventuate!) who fills the void? Centrelink... which means my taxes and yours will pay more in pensions. My SMSF is paying the extra fees you mentioned this year as well... and there's no reductions for having suffered losses ! 





Julia said:


> ''...Further there has been a suggestion that an additional levy should be applied to SMSFs so that their members can be compensated in the event of their making decisions that go bad.
> As someone who is very cautious and conservative in decision making I do not want to be subsidising people who are cavalier in the pursuit of higher interest rates...''




I agree with a levy to the extent that investors should be protected against fraud, which is an entirely different issue compared to risk. I believe that all the investors in Trio Capital, for example, should receive compensation.



Julia said:


> ''...All up, I think you can legislate to the point where ordinary people go nuts in frustration, but nothing, absolutely nothing will ever substitute for acquiring a basic level of financial literacy.
> You can make PDSs as detailed as you like.  They can still absolutely fail to live up to what they claim.
> It's up to the investor to sort out the reality of any opportunity.




I actually said that I think the PDS should be made much clearer. Definitely shorter.


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## Julia (8 November 2012)

k.smith said:


> reasonable degree???... like so many financial planners who got it so wrong??



On the contrary.  Financial literacy will enable the individual to* avoid financial planners,* most of whom are much more interested in their own financial outcomes than that of their clients.
You are assuming the financial planners 'got it wrong'.   Perhaps consider, alternatively, that as long as they were receiving their commissions, they had minimal interest in protecting clients.
(This remark obviously does not refer to all financial planners, many of whom do a competent job for their clients.)



> SMSF are about providing security, and this should not be exposed to RISK, imo.



I'd say they are much more designed to provide a tax advantaged structure for those people who believe they can do a better job of managing their own money than can other people, whether that be individual financial planners or public 'one size fits all' super funds.

Plenty of people running their own SMSFs know how to manage risk.  It is all part of being financially literate.


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## ASICK (8 November 2012)

*If Only It Was That Simple*

I'm all for eduction, after all, it's only when we start to learn that we realise how little we know.

Here's some subjects:

LVRs, RG45s, Financial Reports, Accrual Accounting, Valuations (how to, limitations), Leverage (effect of).

So, point me to the school where I, as an investor, will gain sufficiently education to avoid all the risks which lurk in an investment  an MIF?

Here's ASIC's website: http://tinyurl.com/ay8hsfu

"Our primary objective in our consumer education work is to develop a financially literate community, where Australian consumers can make informed decisions about financial products and services, and identify and avoid scams and swindlers. To help us achieve this objective, we have developed a consumer education strategy
to guide our activities over the period 2001 – 2004. As part of our strategy, we have set out:
• the scope of our consumer education role;
• the priority topic areas that our strategy should focus on; and
• the delivery mechanisms we intend to use for our consumer education initiatives."
Under "Research", ASIC states (in part), "We are not a primary research agency on consumer education. However, appropriate research projects can inform our education work and increase its effectiveness."

Now, let's see a show of hands from those who think the foregoing is helpful? Huh? no hands !

Under "Our Role", (in part), "We do not think it is appropriate, or necessary, for us to be involved in delivering the type of investor education courses that are readily available in the marketplace." and then goes on with, "However, we do have a role in providing direct consumer / investor education and information that is not easily accessible or not already provided by the market."

ASIC was motivated the cite the following excerpt, "“In terms of the learning process, most of the targets for education are the unconsciously unskilled. ASIC activities should focus on moving this group to the consciously unskilled to enable the education process to make them more skilled.” (our emphasis)" - Geez, how profound!

Under "Referral to Other Organizations", ASIC states (in part), "We do not generally have the resources or
the expertise to provide detailed education initiatives (eg adult education courses on investment), or more personalised initiatives."

Yes, to become an accountant, there's heaps of courses.  There's courses for everything - so, what courses does one take to give one's investment a high degree of surity?

Geez .. look folks,  a taskforce on Banksia:
http://www.asic.gov.au/asic/asic.ns...egulation+of+unlisted+debentures?openDocument

When the once ONE BILLION DOLLAR CITY PACIFIC FUND went down the tube, there was no taskforce - none for MFS's PIF, none for .. (on and on).  It really seems the subject is getting sensitive, all those poor country folk losing money, who by the way, were earning LESS than 6% when Banksia hit the skids (so much for the greedy consumer disregarding risk  in favour of above-market returns).

Why the fuss with Banksia investors? Oh Dear, it's so, so obvious - the punters were mostly Victorian, and the Victorian government kickup up a stink, and ASIC, poor dears, are subject to the whims of governments - so, there we have it!  But, none for City Pacific, MFS PIF, Equititrust, LM, etc. etc.

Ya gotta love the last line of the ASIC document, "ASIC is not a prudential regulator but will monitor disclosures made by debenture issuers." - it's what might be called a DISCLAIMER.

And the laughs keep turning in.

Finally, I'm up for education, but short of becoming an accountant, lawyer, AND financial advisor, is there a place where I'll learn all there is to learn about investing in a MIF in Australia?  A One-Stop-Shop? - a place where I'll get to understand how to read every aspect of financial statements, how to interpret RG45s, how I'll understand valuations as they refer to an investment in a MIF, and how to fully understand the accounting standards applied to such an investment - *No, there is not. *

And if there was, is there a "Licence to Invest"? (After all, there's no point having education without assessment) - *nope, there's not one of those either*.

ASIC and goverment spruiks about "Education" for investors are simply a mechanism for both ASIC and goverment to avoid the simple reality that more regulation and oversight is needed, but they're out to shift the onus to investors because that's the easy way to go - there is no doubt (at least in my mind), that ASIC must look to "substance" - it must also look to performance in MIFS - and it must have the where-with-all to pull up those managers who have gone "off the rails".

Maybe the concept of "Agora" (the marketplace) is fine for folks to meet and trade vegetables and the like, but it's just too simplistic a concept for one to go to the market and put at risk all of ones' treasure which has been purposefully set aside for ones' future.

I, for one, say that government should legislate that SMSF should no longer be permitted to be invested into an MIF which is not APRA approved  - there's enough shattered lives.  The "dial" should be turned back towards less risk, and to more regulation.

Of course, I'd be happy to settle for the status quo if, unlike Shiloh ("Merchant of Venice"),  I was legally entitled  to exact my pound of flesh on any loss of investment: http://www.shakespeare-online.com/plots/merchantps.html

Bring back debtor prisons, and I'd feel better: http://tinyurl.com/cpts8ta

Revenge may not bring back my gold, but it'll warm my heart.


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## k.smith (8 November 2012)

*Re: If Only It Was That Simple*



ASICK said:


> Why the fuss with Banksia investors? Oh Dear, it's so, so obvious - the punters were mostly Victorian, and the Victorian government kickup up a stink, and ASIC, poor dears, are subject to the whims of governments - so, there we have it!  But, none for City Pacific, MFS PIF, Equititrust, LM, etc. etc.





http://news.ninemsn.com.au/national/2012/11/08/13/02/banksia-workers-to-get-help-from-vic-govt

''...''These initiatives represent an immediate response to issues being faced by affected communities. The coalition government will continue to undertake work to support local communities in dealing with the impact," Mr Ryan said in a statement on Thursday.
The government would provide funding and support to community groups providing counselling to those impacted, including the local Kyabram hospital, he said.
And the state government would work with the federal government to provide help for those suffering severe financial hardship as a result of the collapse.

...''

But, none for City Pacific, MFS PIF, Equititrust, LM, etc. etc.

12,000 Unitholders in the City Pacific First Mortgage Fund had to wait until 21 February 2011, some three years after their funds were frozen before there was a Hardship Policy in their fund, and some months after that to receive the first hardship payment ! No task force in sight to this day ! 

http://www.smh.com.au/business/murd...the-airport-20100221-onv4.html?skin=text-only
''....Cameron says he needs money to help pay for his funeral and medical costs. ''I'm just at the point where I've got to go on assisted oxygen,'' said Cameron, who suffers from a terminal lung disease...''

Sad stories of suicides and ill health which continue to this day.

It is not just about $$$$, it's about peoples lives.


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## Julia (8 November 2012)

Item on Banksia screening on "7.30" this evening.
http://www.abc.net.au/7.30/content/2012/s3628933.htm


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## k.smith (9 November 2012)

Julia said:


> Item on Banksia screening on "7.30" this evening.
> http://www.abc.net.au/7.30/content/2012/s3628933.htm




What disastrous implications there will no doubt be in such a small rural community ! Seemingly there are not 3000, but 15,000 people effected. Lots of sleepless nights for so many.

Can't help but think of people who lost their life savings in these funds who have carried the pain of their loss on their own these last four years.. thousands and thousands of people dispersed all over the country, in every state,  most are unaware of each other. City Pacific First Mortgage Fund had 12,000 unitholders, MFS around 10,000, theres Equititrust, Allco, Bridgecorp, Trio Capital, LM ...and the list keeps growing.

http://www.theaustralian.com.au/bus...-jumps-five-fold/story-fn91wd6x-1226513331557
''....The spotlight is again being shone on mortgage funds after the $650m collapse of Banksia Securities last month and the July failure of the $130m Provident Capital. The corporate regulator has launched an investigation into Banksia and is expected to make recommendations to treasury regarding the mortgage fund sector in coming weeks.

A key concern held by the Australian Securities & Investments Commission and others is that investors in mortgage funds are not properly aware of the risks involved with the products, which appears to be supported by the fact many choose to invest in the funds despite the major banks offering similar rates of return.

Another concern is that the funds are operating as "shadow" banks, by taking deposits and allowing withdrawals at any time, while not being subject to the strict provisions of the Australian Prudential Regulation Authority.

GSI is offering a 5.6 per cent return on 24-month term deposits and 5.4 per cent for 12-month deposits. The major banks are offering term deposit returns of about 5 per cent....''


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## ASICK (9 November 2012)

*It's Just Not Worth the Heartache*

*The Federal Government MUST, without delay,  make it unlawful for SMSFs to be invested in non-APRA approved MIFs:*

http://www.standard.net.au/story/82...plans-trip-to-meet-with-administrators/?cs=72

http://www.standard.net.au/story/760481/banksia-victims-super-loss-scuttles-retirement-plans/

"She worked hard to have a self-managed fund to avoid being a burden on taxpayers in retirement and her superannuation should have been protected, Ms Richards said."

http://www.businessspectator.com.au...it-union-pd20121109-ZUNGM?OpenDocument&src=mp

"Finance companies have been left to swing in the wind with only superficial disclosure-based regulation for the last two decades. This flawed regulatory structure followed the Wallis Inquiry of 1995 which assumed that unsophisticated investors could easily recognize the difference between an Approved Deposit Taking Institution and a finance company with capital protection standards that were utterly inadequate.

Clearly that view of regulation must now be reassessed. Medcraft as ASIC supremo has announced a special task force to examine what happened at Banksia ...but does ASIC really need to know much more?

Disclosure is not enough: ASIC has to seek and wield a new power that will offer clients of finance companies the sort of professional regulation they can reasonably expect from a credit union. Until it does there will be more Banksias and the next one might be well beyond the scope of a regional counselling service."


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## Julia (9 November 2012)

*Re: It's Just Not Worth the Heartache*



ASICK said:


> *The Federal Government MUST, without delay,  make it unlawful for SMSFs to be invested in non-APRA approved MIFs:*



Why pick out SMSFs?
I totally disagree with the principle, but if such were to be legislated why wouldn't it equally apply to all forms of Super?

For god's sake, the whole idea of having a SMSF is so that the trustees can make their own decisions about where to invest.


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## Klogg (9 November 2012)

*Re: It's Just Not Worth the Heartache*



Julia said:


> Why pick out SMSFs?
> I totally disagree with the principle, but if such were to be legislated why wouldn't it equally apply to all forms of Super?
> 
> For god's sake, the whole idea of having a SMSF is so that the trustees can make their own decisions about where to invest.




I agree with you here. But I guess their train of thought is that people need this money to retire on or it hits the governments bottom line... So better to restrict them to potentially lower returns than allow them to lose their money altogether (not that this will guarantee money won't be lost).


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## ASICK (9 November 2012)

*Re: It's Just Not Worth the Heartache*



Klogg said:


> I agree with you here. But I guess their train of thought is that people need this money to retire on or it hits the governments bottom line... So better to restrict them to potentially lower returns than allow them to lose their money altogether (not that this will guarantee money won't be lost).




Yes, ya gotta restrict "them" - those who are less able to make decisions. So, it's better for "them" to invest in APRA approved MIFs/MISs (as opposed to such schemes which are not APRA approved) - great idea Klogg.  I think you're onto something there.  After all, there's so much regulation in relation to SMSFs already, a little bit more isn't too much of a problem.


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## ASICK (9 November 2012)

*ASIC's "Dial"- 10 August 2009*

Previously I referred to an article in relation to ASIC's "dial" - here's the link and an excerpt (please keep in mind, the article is from 10 August 2009):-

http://www.investsmart.com.au/news/news.asp?Action=Display&DocID=SMH090810S53EE5FHCBG

"Under the model, APRA monitors banks, credit unions and other "authorised deposit-taking institutions [ADIs]", while other outfits, such as mortgage funds and debentures, have disclosure and conduct requirements enforced by ASIC. When it came to the non-ADI operators, the Timbercorps and the Westpoints, Wallis advocated "efficient market theory; let the market sort it out", D'Aloisio says.

"What I'm trying to encourage now is a debate about whether those policy settings have been set at the right level. Because of what we've seen and the losses to investors, should we be turning the dial to more protection, and taking the risk that that might make the markets less efficient, and could marginally add to cost to capital?

"With the experience we've had, because we've got this huge part of the population that are retirees who need to invest because of how the super regulation works, we may need to turn the dial more in that way."

This week, at the Investment and Financial Services Association conference on the Gold Coast, D'Aloisio put forward a series of suggestions for the Government around the area of financial advice, including that advisers be required by law to act in the best interests of clients.

But he suggested that it might be time to place capital adequacy and liquidity requirements on the likes of managed investment schemes and mortgage trusts  requirements similar to those required by APRA."


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## k.smith (9 November 2012)

*Re: It's Just Not Worth the Heartache*



Julia said:


> Why pick out SMSFs?
> I totally disagree with the principle, but if such were to be legislated why wouldn't it equally apply to all forms of Super?
> 
> For god's sake, the whole idea of having a SMSF is so that the trustees can make their own decisions about where to invest.




There are other reasons why people would choose a SMSF. Reasons may include the control of trustees being able to make their own decisions about where to invest, but reasons such as security, more flexibility, estate planning, costs etc also come into it..

But the PURPOSE for superannuation saving is to provide for retirement income, and this should be imo ROCK SOLID.

With tax concessions provided to superannuation to encourage people to save for retirement, isn't it a contradiction that a SMSF which IS regulated and that receives tax concessions (and a yearly co-contribution payment) is them permitted to invest in schemes that are not regulated, and where the original purpose of providing for retirement is all placed at risk?


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## Judd (10 November 2012)

Interesting isn't it?  With over 425,000 SMSF's in operation, when a relatively small number lose money due to a multitude of reasons, and admittedly that badly hurts the individuals involved, up goes the cry that all SMSF's should or should not be allowed to do this or that as money could be lost.

On that basis maybe SMSF's should not be allowed to invest in art works (that is not APRA regulated) or property (that is not APRA regulated.)  Not that I advocate these merely pointing out what SMSF's are presently permitted to do.

What next?  Only allowed to place funds in Term Deposits with APRA regulated financial institutions as every other investment carries risk?

I no longer have an SMSF as I simply do not need one but I can appreciate why individuals establish them.  I can also appreciate why various interested entities do not like them.  It allows individuals to have control and that scares the bejesus out of Governments, fund managers and other self-interested parties.


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## ASICK (10 November 2012)

*If In Doubt, DON'T!*

Here's an approved investment:

http://www.miguardianfiduciary.com/Home.aspx

Here's some comment about it:

https://www.aussiestockforums.com/forums/showthread.php?t=19877&page=142&p=736785#post736785

and that comment about having to be licenced to be a barber, but not for a banker - soothing, right?

and you guys wonder why investors need protection?

I have no doubt that SMSF's should not be permitted to invest in non-APRA approved MIS investments.

We'll never agree with each other - perhaps an old adage I once heard in the army is applicable, "if in doubt, DON'T!"

Trouble is, doubt doesn't always raise its  head when the path to depositing one's savings is strewn with rose petals.

UPDATE - an old link that may be of interest:
http://www.smh.com.au/business/new-champion-of-retirees-who-lost-life-savings-20120711-21w84.html


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## Judd (10 November 2012)

*Re: If In Doubt, DON'T!*



ASICK said:


> I have no doubt that SMSF's should not be permitted to invest in non-APRA approved investments.
> 
> We'll never agree with each other - perhaps an old adage I once heard in the army is applicable, "if in doubt, DON'T!"




Absolutely agree with you in regard to individual opinions and views

Just a thought on the question of "permitted" investments.  Should that also apply to investments outside superannuation since, as I understand it, quite a number of individuals who have been hard it by Banksia did not place funds in it via superannuation?  Or is it OK if they do their dosh as no tax concessions were involved?

It is a vexed issue.  I have seen the results on the members of my family who have lost money and it is certainly not pleasant as a number would appreciate.

Actually I don't have an answer to my own questions.  I believe in the right of people to invest their money where they see fit, provided it is lawful, yet at the same time I do not wish them to lose their hard earned as a result of shonky schemes.

As for these mortgage funds I have not been near them.  Haven't even read a prospectus.  I just assumed they were established to provide borrowing to those who could not get a loan from a bank because they did not meet the bank's lending criteria (and the bank's can get it horribly wrong) and so were way up the risk curve.  Probably pure luck on my part.


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## Julia (10 November 2012)

k.smith said:


> There are other reasons why people would choose a SMSF. Reasons may include the control of trustees being able to make their own decisions about where to invest, but reasons such as security, more flexibility, estate planning, costs etc also come into it..
> 
> But the PURPOSE for superannuation saving is to provide for retirement income, and this should be imo ROCK SOLID.



But why pick out SMSFs?  Why not apply the same principle to all Superannuation?  If your proposition were to be logical you would have to apply it right across all Super.  People who have Super in public super funds don't usually even know where it's being placed.   Do they know that their shares are regularly loaned out e.g.?
I doubt it in most cases.

Most people in Super funds have, maybe just by default, taken the Balanced option.  This usually includes a high proportion of shares, up to 70%.   You can't say these are 'rock solid'.  As we have seen, markets can fall suddenly and they do.
So, as Judd points out, about the only 'rock solid' investment is an APRA regulated bank deposit.
If interest rates are high, that's not too bad for retirees in pension phase who are paying no tax, but for many, even the tax concessions, once inflation is taken into account, will not make it a worthwhile investment.



Judd said:


> As for these mortgage funds I have not been near them.  Haven't even read a prospectus.  I just assumed they were established to provide borrowing to those who could not get a loan from a bank because they did not meet the bank's lending criteria (and the bank's can get it horribly wrong) and so were way up the risk curve.



Seems a pretty logical assumption.

I totally understand the distress of anyone who has lost money.  It's awful.  Especially if one is older and unable to save that capital again.  And in the case of Banksia, the fact that it was a local company, considered an essential part of the community, especially shocking.
But it's not reasonable to then legislate to limit the rights of everyone as regards their choices.


----------



## ASICK (10 November 2012)

*MIS - So Easy to Set up*

An MIS is quite easy to set up - seems a "First Mortgage" fund is  able to be structured at least two ways:

1.  Re: Trilogy Healthcare REIT
http://www.moneymagik.com/analysis_REIT.php

The manager is in this get done a deal with a relative company (Rojacan Pty. Ltd.) which seems to have lent enough to the fund to gain the deposit to buy the property:
http://www.hartiganbolt.com.au/site/property_detail.asp?id=201&pge=1

And a bank, in this case, the ANZ fronted up with the remainer to buy the sad looking property at Crows Nest.  The manager was able to spend over $450k of investors money over two years (2008 / 2009) to lure investors into the fund, and then Rojacan was able to jump out and leave the punters to their face.  In fact, in 2009, Trilogy took $3.555m in investment at $1.00 per unit when the current value for such units (30 June 2008) was only $0.63 - ASIC isn't concerned in the least, it's a prudential problem - if investors are dumb enough to invest in such a way, then so be it.

The 2012 return on the link to www.moneymagik.com/ above - it's all over for investors in that fund.

and a second way:

2. Re: Trilogy Cape Parks fund
http://www.moneymagik.com/cape_parks_fund.php

The manager for this fund is/was looking for investment:
http://www.atpfinancialpartners.com.au/3234_New Offers.html

However, while the ad says, "The planned expansion of the company required two capital injections. The first was successfully completed in 2010. Since 2010 the market penetration of the Cape Parks Fund with placement on the “Approved Product List” of Licensed Dealers has grown rapidly.", the fund has purchased an investment property (refer the above www.moneymagik.com/ link)

So, whether the fund intended to start off with a "seed" or not, it didn't - it started off luring investors through spruiks on Trilogy's and Newcastle Wealth's webesite without an investment property in the fund and without an adequate income from business activities to pay the nominated return and cover fund expenses.

In fact, as at 30 June 2011, the fund only had only $30k of arms-length investment and spruiked a 8.5% return (which was mostly paid for by the manager, since no investment property had been purchased) 
http://capefunds.com/assets/files/NOTICE_Income support to Cape Parks Fund.pdf

As at 30 June 2012, the fund held 1000 * $1.00 units but is still advertised as "an important investment opportunity":

http://newcastlewealth.com.au/2011/...on-parks-an-important-investment-opportunity/

I'm pleased that the $30k investment in 2011 was returned in 2012 - actually, I think that right forms part of the PDS (if an investment property is not purchased).

It's obvious (at least to me), that Trilogy's massive spend on advertising in order to extract Rojacan's loan in its Healthcare REIT is proof enough that managers are not in the risk game, that's for the punters.

Trilogy's Healthcare REIT fund was a disaster waiting to happen - yet on it went, losses year after year - with investors locked in for the ride to the end, just like one might experience in a car crash.

All it needed was some seed money (for a deposit), a greedy and compliant bank, and (as some might say), some gullible punters, and it's all set in stone (as per PDS/constitution).  It didn't have to succeed, it only had to conform. Over $450k of punters' money in advertising - that's quite a spend.

Now, I wonder what the outcome would have been if the mob at Trilogy were required to make the fund APRA compliant? Maybe it would never have got off the ground - now, I'm sure that would have been more than pleasing to those who did their hard-earned in that fund.


----------



## ASICK (10 November 2012)

*IT Has Been Decided!*

I should point out that my last posting was not intended to respond to Julia's last posting - I had not seen Julia's posting. 

The argument is circular now.

A decision was handed to me from "up high" - my view is right, SMSFs should only be permitted to invest in APRA approved MISs/MIFs - Julia's view is misguided.  AMEN

Thank you God.


----------



## Klogg (10 November 2012)

*Re: It's Just Not Worth the Heartache*



ASICK said:


> Yes, ya gotta restrict "them" - those who are less able to make decisions. So, it's better for "them" to invest in APRA approved MIFs/MISs (as opposed to such schemes which are not APRA approved) - great idea Klogg.  I think you're onto something there.  After all, there's so much regulation in relation to SMSFs already, a little bit more isn't too much of a problem.




I wasn't supporting the decision. I just said, that's the approach.

And "them" referred to any people with a SMSF.


----------



## Julia (10 November 2012)

*Re: IT Has Been Decided!*



ASICK said:


> A decision was handed to me from "up high" - my view is right, SMSFs should only be permitted to invest in APRA approved MISs/MIFs - Julia's view is misguided.  AMEN
> 
> Thank you God.



The topic is  interesting.  Seems a pity, therefore, when genuinely offered considerations are ignored in favour of facetiousness.


----------



## ASICK (10 November 2012)

*Re: IT Has Been Decided!*



Julia said:


> The topic is  interesting.  Seems a pity, therefore, when genuinely offered considerations are ignored in favour of facetiousness.




Point taken - I won't drink & post again - sorry.


----------



## k.smith (10 November 2012)

Julia said:


> ''But why pick out SMSFs?  Why not apply the same principle to all Superannuation?  If your proposition were to be logical you would have to apply it right across all Super.  People who have Super in public super funds don't usually even know where it's being placed.   Do they know that their shares are regularly loaned out e.g.?
> I doubt it in most cases.....''




Unlike SMSF, Superannuation Funds are covered by APRA, who monitors their risk management. 

http://www.apra.gov.au/AboutAPRA/Pages/Supervision.aspx
''....
APRA supervises Australia’s banks, building societies and credit unions (authorised deposit-taking institutions), life and general insurance and reinsurance companies, friendly societies and superannuation funds (excluding self-managed funds). APRA promotes financial stability by requiring these institutions to manage risk prudently so as to minimise the likelihood of financial losses to depositors, policy holders and superannuation fund members.

Through its supervision, APRA’s aim is to identify potential weaknesses in its regulated institutions as early as possible. APRA follows a risk-based approach under which institutions facing greater risks receive closer supervision.

After an institution is licensed by APRA, it is subject to ongoing supervision to ensure it is managing risks prudently and meeting prudential requirements, and to identify those institutions that are unable or unwilling to do so...''
''....The two main supervisory tools APRA uses are on-site and off-site analysis. These reviews are undertaken by prudential supervisors with in-depth knowledge of institutions in a particular sector, and supported by specialist risk experts...''

The article goes on to describe  APRA’s risk-based approach to supervision.

Back to a link I posted earlier

http://www.professionalplanner.com.a...%80%9D-future/
''....“The typical superannuation fund invests in equities, fixed income, property and cash. These are all products that that are regulated by ASIC.”


Risk management in a SMSF is the responsibility of the trustee, and is not regulated by APRA. SMSFs who invested in MIS and lost their retirement funds are alone. Having been exposed in a number of collapsed MIS, and become quite involved in the how,whys and wherefores, both before and after the event of collapse, has illustrated to me how easily dudded investors are, and how difficult it is to protect oneself when a fund becomes illiquid.  Understanding the extent of risk in these schemes, I will NEVER invest in such schemes again. Even in the "good times". But what about the next tranche of unsuspecting SMSFs? When term deposits fall to low levels, and shares putt-putt along, and the glossy brochures with the star awards and sparkles arrive? 

A recent report said that the number of SMSFs in Australia has increased by 7% for the year to March, from 435,000 to 468,000. With such increases in the number of SMSFs, will the likelihood of investors being lured into risky schemes also increase? Do we just accept that there will be devastating collapses from time to time and casualties?  
The purpose of superannuation is to provide for retirement and the working population financially supports this strategy expressed in tax concessions and rebates.

There is a responsibility to ensure that the products that SMSFs can invest in are prudentially regulated.


----------



## Julia (10 November 2012)

ASICK said:


> Point taken - I won't drink & post again - sorry.



Would hate to be a killjoy, ASICK.   The facetiousness was understandable and entirely forgivable.



k.smith said:


> Unlike SMSF, Superannuation Funds are covered by APRA, who monitors their risk management.



Thank you for that, k.smith.  I've never had anything to do with public Super funds and had no idea they were APRA regulated.  Much appreciate the correction.

At the same time, is there anything in the legislation which actually prevents these Super funds from investing in such as Banksia should the fund managers deem it appropriate?

Another question:  Why does the government allow fund trustees to lend shares owned by their members to facilitate short selling by hedge fund and other traders? The trustees are lending shares they hold only as trustees, raising the question of whether they are acting in the best interests of members.

Given the poor performance of public super funds in recent times, it would seem reasonable to question the judgment of super fund managers and whether they are necessarily acting in the best interests of their members.

All these considerations bring me back to the conclusion that the best defence any individual has against shonky operators, whether apparently regulated or not, is to acquire some personal financial literacy in order to be able to avoid allowing anyone else the management of your own money.


----------



## FxTrader (10 November 2012)

"_After an institution is licensed by APRA, it is subject to ongoing supervision to ensure it is managing risks prudently and meeting prudential requirements, and to identify those institutions that are unable or unwilling to do so.._.''

How many SMSF trustees would want such supervision and/or are prepared to pay for it?  On the other hand, financial risk management is actually a highly skilled profession and way beyond the capability of the vast majority of SMSF trustees.  The regulatory requirement for SMSF is simply an investment strategy (most of which are just short and deliberately vague compositions) and an RMP (risk management plan) if investing in derivatives and also a DRS (derivative risk statement) when creating a charge over assets in the fund.  I spent many hours creating these documents but I suspect most trustees do the minimum required by law or just let their accountant draft up something compliant.

There is NO responsibility incumbent upon SMSF trustees to invest in products that are prudentially regulated.  The requirement is to adhere to the investment strategy of the fund while "speculation" must be avoided.  Good luck trying to discern what ASIC defines as speculation.  Banksia and other such entities would be perfectly acceptable investment vehicles for SMSF unless such an investment class was restricted by the fund's investment strategy.




Julia said:


> All these considerations bring me back to the conclusion that the best defense any individual has against shonky operators, whether apparently regulated or not, is to acquire some personal financial literacy in order to be able to avoid allowing anyone else the management of your own money.




Amen, there should be some mandatory literacy baseline for super trustees in particular.


----------



## k.smith (11 November 2012)

Julia said:


> At the same time, is there anything in the legislation which actually prevents these Super funds from investing in such as Banksia should the fund managers deem it appropriate?
> 
> Another question:  Why does the government allow fund trustees to lend shares owned by their members to facilitate short selling by hedge fund and other traders? The trustees are lending shares they hold only as trustees, raising the question of whether they are acting in the best interests of members.
> 
> ...





Julia, did you read this? 

http://www.smh.com.au/opinion/politics/supersized-ripoff-for-average-workers-20121106-28w17.html

''.....The reason there is no great outcry about this system is that so many well-paid people profit from it. The people who do the best are the funds managers. They are allocated money by the super funds to invest in stocks and bonds. The more money they manage, the more they get paid. They also get bonuses if they ''outperform'' the industry average.

The average return of industry super funds last year was 0.61 per cent, considerably less than you would have got by putting your money in the bank. Over the past five years the average return was minus-0.17 per cent, which is less than you would have got by putting your money under the mattress. On average, people who had money in these funds went backwards and paid fees for the privilege of losing their own money!...''

''....Even today, industry funds are quoting retirement benefits based on 4.5 per cent real per annum returns. That is not the world of recent years. No one can say if it will be the world of the next 20 or 30 years. It is high time there was a thorough and open examination of returns in this industry. There has been too little critical scrutiny. We should remember that the system is not there for the benefit of those who work in it but for those who fund it out of their hard-earned wages....''

and this

http://www.abc.net.au/news/2012-10-31/kohler-australia-super-disgrace/4343108

''....Many people, realising late in life that they won't have enough, start taking bigger and bigger risks as they approach retirement to improve their returns, when the opposite is recommended. For some this pays; for many it is a disaster.

Meanwhile, when we retire we are left to our own devices with a lump of money. Usually, but not always, we consult an adviser. Sometimes we give the lot to a nice man who then runs off with it.

The advisers used to be paid commissions by investment managers, as well as unscrupulous shysters, to ensure that the money found its way back to them.

Those commissions are now banned, in the face of a ferocious campaign from the industry, but the money still mostly goes back into "balanced" investment portfolios - that is, shares, property, hedge funds, private equity, bonds and cash - using expensive managers for each category....''

It has been enlightening to read these and other articles today. I understand now why so many people are electing to start their own SMSFs and how concerning the implications of that are. Remember the mailout that we got from ASIC warning everyone about shonks? And all the articles warning us about fraud?

The future looks worrying. Lots of problems.

In answer to your questions re shares and fund managers investing in MIS I am (at this stage) unsure of the answers. But rest assured, I will work on becoming financially literate...


----------



## k.smith (11 November 2012)

FxTrader said:


> ''...  Banksia and other such entities would be perfectly acceptable investment vehicles for SMSF unless such an investment class was restricted by the fund's investment strategy....''.




And Super Funds? Could they invest in companies such as Banksia?


----------



## Julia (11 November 2012)

k.smith said:


> Julia, did you read this?



The comments are 100% accurate.  If only more people would accept the reality instead of continuing to imagine all financial advisers and fund managers have the clients' best interests at heart.

(As always, I absolutely acknowledge that there are decent, honest people in these roles.  The problem is that, without any basic financial literacy, it's very difficult for the average person to discern the competence or otherwise of these advisers).

On the Storm Financial thread, it has repeatedly been claimed that "we should be able to trust absolutely the advice of any licensed financial planner/adviser".  Yes.  In a perfect world, we should all be able to trust that anyone with a qualification in any field will be competent, have integrity, and act in our best interests.

But we do not live in a perfect world and need to deal with the reality that shonky operators abound in all fields, including that of finance, *and take this into account when making financial decisions.*
I'm still incredulous that it was considered necessary to legislate that "advisers must act in the best interests of their clients" in the wake of the enquiry.   That said it all imo.  

I understand the anger at losing money, and the reaction to cry for more legislation, but truly, a superior  response is to encourage more people to take personal responsibility for their own financial outcomes.
There is, I think, a misconception that this is far more complicated and difficult than it actually is, perhaps due to such an esoteric notion being promoted by professional advisers in order to protect their own position.

Congratulations, k.smith, on deciding to take charge of your own financial situation.  Absolutely no one will have a greater interest in its success than you.


----------



## ASICK (11 November 2012)

Julia said:


> ... I understand the anger at losing money, and the reaction to cry for more legislation, but truly, a superior  response is to encourage more people to take personal responsibility for their own financial outcomes. ...




If only God had created us equally, and then gave us all an equal opportunity :
http://www.indiana.edu/~intell/bellcurve.shtml

Disclaimer: Sorry - I've been drinking and posting again - but it's okay - I don't need a licence.


----------



## Julia (11 November 2012)

ASICK said:


> If only God had created us equally, and then gave us all an equal opportunity :
> http://www.indiana.edu/~intell/bellcurve.shtml
> 
> Disclaimer: Sorry - I've been drinking and posting again - but it's okay - I don't need a licence.



I'm not here to evangelise, ASICK.  If it suits you to choose not to take any suggested path, then that's fine with me.  Maybe then, however, don't come here and complain about how you have been done over.
I have never met anyone who was born with financial acumen.

I'm simply attempting to offer an option which I have found to work.  You say you have acquired considerable professional qualifications in the legal field.  I admire that.   I cannot understand why you'd not similarly be prepared to put that learning capacity to work in your own financial interests.  Your choices, however, are none of my business.


----------



## k.smith (11 November 2012)

Julia said:


> The comments are 100% accurate.  If only more people would accept the reality instead of continuing to imagine all financial advisers and fund managers have the clients' best interests at heart.
> 
> (As always, I absolutely acknowledge that there are decent, honest people in these roles.  The problem is that, without any basic financial literacy, it's very difficult for the average person to discern the competence or otherwise of these advisers).
> 
> ...




The problem is we thought we WERE in charge. And I wonder how many SMSF investors at the moment who haven't suffered loss believe they are in charge?
I bet a lot of investors at Banksia thought they were in charge until a month or so ago.

So how do you think you should sell financial literacy to people who think that they are "in charge"? And how many will actual understand the concepts?  And who will judge if they are compliant? And where do they invest all those super contributions for their future if they aren't? 
Just because YOU can achieve a certain degree of financial literacy does not mean that all 468,000 SMSF trustees can, especially faced with having to "..deal with the reality that shonky operators abound in all fields.." How will you educate all those 468,000 trustees to spot shonks? Even the auditors can't !!! 

The fact is that the industry super funds are returning zilch, and that in part has contributed to an unbelievable surge in SMSFs. Last year they increased in numbers by 7%. So where do they go for advice? to financial planners?

Recent research by ASIC about financial advisers and fund managers imo just compounds the problem. 
http://www.abc.net.au/news/2012-03-28/asic-raps-financial-planners-over-advice/3917290

''... rated just over a third of the advice given as poor, with just two examples of advice rated as "good quality".

 I think investors will choose to rely more on their own strategies as reports such as this have been so prevalent. 
With all those 468,000 trustees around, imo enough to incite a new flurry of schemes and dreams.
DANGER, DANGER.

When we placed funds from our "regulated" SMSF into these schemes we interpreted the fact that we could do so as an endorsement by the regulators.
All the funds we invested in carried an AFSL, they were all registered companies with ASIC.
It wasn't until some time after "the tide went out" that we realised that we were on our own in a scheme regulated by ASIC, but not prudentially regulated by ASIC.  
And that there were MANY of us in similar circumstances, from all different backgrounds, including educational.

Here's some stats about frozen funds... Banksia, the latest casualty, of course does not show up yet, that is still to come. And there will be more asset writedowns.

http://www.asic.gov.au/asic/pdflib.n...management.pdf 


''....Current frozen fund estimates
Based on the most recent data available to ASIC (at November 2011), we estimate that FUM that are considered frozen have declined to $15.26 billion from a high of $25.36 billion in November 2009...''
''....Since November 2009, frozen FUM have declined through periodic withdrawal offers, as well as $127 million of hardship redemptions and asset write-downs. Of the current total frozen FUM of $15.26 billion, funds worth $6.0 billion have been restructured with member approval or are winding up their schemes...''

 So "Congratulations" ? no congratulations, thanks...the more I have learnt, the more I realise what I don't know..
 Unless these funds are regulated by APRA, it will just keep happening. SMSFs shouldn't have exposure to  risk where they can loss not just part, but ALL of their investment. In the case of the MIS schemes that we are involved with, the actually amounts retrieved  to date after all those asset write-downs are very little, and the expenses paid huge. Furthermore, when MIS funds freeze, we are at the mercy of every scheme in the book to separate us from our legal rights to redemptions and to be treated equally as per the Corporations Act, and to this day we continue to face this alone. And no, I am not angry or crying. I know that the world is not a perfect place. Everyone is different.  

http://www.indiana.edu/~intell/bellcurve.shtml
''...."Inequality of endowments, including intelligence, is a reality. Trying to pretend that inequality does not really exist has led to disaster. Trying to eradicate inequality with artificially manufactured outcomes has led to disaster.


----------



## Julia (11 November 2012)

This is like being in the Storm Financial thread all over again.

I have simply offered an opinion which I hoped would be helpful.

Apparently it is not.

End of attempt for me.


----------



## So_Cynical (12 November 2012)

k.smith said:


> When we placed funds from our "regulated" SMSF into these schemes we interpreted the fact that we could do so as an endorsement by the regulators.




Dude seriously...the stock market is regulated do you interpret that to mean you cant lose money? or because your car meets Aust design rules that it wont break down?


----------



## Judd (12 November 2012)

Julia said:


> This is like being in the Storm Financial thread all over again.
> 
> I have simply offered an opinion which I hoped would be helpful.
> 
> ...




Gets a bit that way doesn't it Julia?

Probably the apparent conflict is that posters who have lost money, which obviously is not something I like to see, propose actions and/or legislation to apply to all investors.  The understandable and unstated reaction is “Who elected you to tell us what to do?”

There are many, many individuals, and indeed SMSF's, quietly getting on with following their particular investment strategy and suddenly a group, which have no involvement with and have no knowledge of those people or their investment arrangements, advocate various solutions applicable to problems they encountered.  Who is to say those particular issues will be actually encountered by the vast majority of investors?

It is interesting.  However, I do wonder though how the regulation of these MIS under APRA will solve poor management decisions by the principals of the respective organisations.  Got a sneaking decision that it will not.

Like you I am out of this thread.


----------



## k.smith (12 November 2012)

So_Cynical said:


> Dude seriously...the stock market is regulated do you interpret that to mean you cant lose money? or because your car meets Aust design rules that it wont break down?





Geez... I think everybody knows that there is a risk that their car can break down. And the very nature of the stockmarket being that stocks rise and fall in value.

We invested in MIS to avoid the obvious volatility of such investments. They were marketed as safe, secure, reliable, as first mortgage funds, and in fact, they still are.

When Westpoint fell in 2005, did investors realise they faced comparable risks in other MIS?
The regulators obviously did with the flurry of activity that followed. But rather than a mass exodus out of the funds where investors identified the risks that they face in these MIS schemes, the reverse happened.
With disasterous consequences for so many. And it continues to this day.

With more and more people electing to roll into SMSFs, how many will fall for the representations that these funds make?
How many will ever attain the financial literacy to be able to understand the disclosures in the RG45 reports and identify the risks in the Product Disclosures? And how many will attain the skills to discern between one scheme and another?
Perhaps a lot of the posters on these forums will, but do they represent the average Mum and Dad investor who like them have super funds that they need to invest?


----------



## ASICK (12 November 2012)

So_Cynical said:


> Dude seriously...the stock market is regulated do you interpret that to mean you cant lose money? or because your car meets Aust design rules that it wont break down?




Thanks for your input Stud - that's quite an inane argument you've put on the table.  I'm quite surprised that you refer to the stock market, but since you do - the market is regulated, and rightly so.  And it's risky - in fact, it's speculative with punters in for (hopefully) rapid wins, but when things go pear-shaped, the borse steps in and halts trading - why do that? Why not just let the whole thing collapse? Why not let the market decide the outcome?  

Of course, I don't know what's in your head, but I'd guess that if you were a shareholder in a wildly crashing stock, you might find some comfort in supervisory intervention - or maybe, if we take your argument literally, you'll be happy to see the whole thing fall to the ground.

And your argument about cars - that's really crazy.  Implementation of a system of quality control does not guarantee perfection, it merely gives rise to an expectation that an average (hopefully, high) value product is produced.  Feedback (sample testing) reduces defects.  Such a system also gives some degree of certainly that, on failure, there is a process whereby that failure is rectified (be it before or after sale).

I'm sure you're aware that there are folk in our communities who aren't able to make decisions for themselves - those too young to enter into legally binding contracts, certain handicapped individuals, and those who are infirmed (mentally) by age and/or disease.

I agree that education would be a good thing, but without assessment, education is meaningless.  Setting aside those 911 pilots, I'd say it's impossible to learn to fly a cessna 150 and then jump into the captain's seat of a 747 and fly off and arrive at any destination (even the one taken off from).  So, becoming a pilot of one type of aircraft does not necessarily give rise to the ability to fly other types of aircraft.

So, it's not mere investment education, it has to be specific education (after all, there really is much to learn), and it has to be assessed and following on from such an assessment, there must be some recognition, maybe a certificate - or a badge - then when one invests, one presents a certified copy of that certificate of simply shows the badge.  Much like a driver's licence, pilot's licence, boat licence, plumber's licence, electrican's licence, doctor's certificate to practice, lawyer's certificate, etc.  etc.. along with all of those we'd have an investor's licence.: Those unable to make financial decisions  (those spoken to above) would not be permitted to hold such a licence.

Then the fully educated individual armed with his/her certificate/badge could launch him/herself head-long into an unregulated market - but now,  the risks are apparent, PDSs and financial statements have meaning.

Knowing all about each investment, investors would think as one - there'd be no ignorant and uneducated - there'd be no fragmentation when, say, MIFs are frozen - they'd know how to solve the problem, and they all vote as one - yes, a wonderful world.

I'm really forward to the "University of Finance" where graduates are certifited to have a full understanding of all aspects of each or relevant investment/s thereby giving rise to equal opportunity for all - there will be no more cries of "buyer beware!", but cries of "market beware!".


----------



## k.smith (12 November 2012)

ASICK said:


> I'm really forward to the "University of Finance" where graduates are certifited to have a full understanding of all aspects of each or relevant investment/s thereby giving rise to equal opportunity for all - there will be no more cries of "buyer beware!", but cries of "market beware!".



Perhaps the diclaimers should start at the beginning, when we part with our 9% compulsory contributions and read... 

....''you are parting with 9% of your wages to provide for yourself in retirement. The choice as to whether you invest this in an industry fund or in a SMSF is yours. If you elect to deposit these compulsory contributions into an industry fund, you may find your funds eroded by fees and low returns. If you elect to roll these funds into SMSFs you may lose ALL of your funds"

I don't think it would take a degree at the University of Finance for wage earners to work out that the whole concept of parting with their wages to provide security for themselves in retirement is flawed.

I just read this...

''....The only thing that has managed to rise in the five years since the global meltdown have been fees charged by those running our funds - up 3.6 per cent per annum.
Now that's a safe bet and a decent return....''


Read more: http://www.news.com.au/money/supera...ce/story-e6frfmdi-1226513987324#ixzz2By9ThoiE


----------



## ASICK (15 November 2012)

*Banksia - some updates*

$100m cash paid out:
http://www.theaustralian.com.au/bus...hristmas-present/story-fn91wd6x-1226516942072

Not everyone's happy:
http://www.abc.net.au/news/2012-11-...ppy-with-initial-return/4372920?&section=news

Staff lose jobs:
http://www.smh.com.au/business/bank...ff-axed-as-branches-close-20121113-29a9x.html

(but the link failed when I tried it - did the bad news get axed too?)

It'd be interesting to see some accounts & RG45s if possible - receiver updates would be very interesting.

Any "can do" folk out there?


----------



## lusk (16 November 2012)

*Re: Banksia - some updates*



ASICK said:


> $100m cash paid out:
> http://www.theaustralian.com.au/bus...hristmas-present/story-fn91wd6x-1226516942072
> 
> Not everyone's happy:
> ...




"McGrathNicol is expected to separate the company's good assets from the bad, package them and put them to the market."

Good luck getting a good price for loans that already have started defaulting.


----------



## ASICK (16 November 2012)

*Banksia - Latest Information*



lusk said:


> "McGrathNicol is expected to separate the company's good assets from the bad, package them and put them to the market."
> 
> Good luck getting a good price for loans that already have started defaulting.




Here we go:

http://www.banksiagroup.com.au/


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## k.smith (16 November 2012)

http://www.afr.com/p/personal_finan...unds_know_the_risks_of_Y6qaU06Xlais1sNue1zFZN

''....The corporate regulator has signalled it is still worried about the way many unlisted property schemes operate.
The Australian Securities and Investments Commission last week released an updated investor guide aimed at lifting awareness of the risks associated with investing in unlisted property schemes.

The regulator has good reason to worry as many retirees are turning to the sector due to their nervousness about the equity markets, but with an insufficient understanding of the risks.....''

''........These steps and ASIC’s own advice rely on consumers being able to assess often complex risks and operators doing the best by their investors. All too often this is not the case....''


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## k.smith (20 November 2012)

Very "to the topic" article in the SMH today..

http://www.smh.com.au/business/regu...-investors-20121116-29i8w.html?skin=text-only

 "...But the advertising of debentures on radio and television as bricks-and- mortar investments paying more than term deposits is always likely to have more influence on unsophisticated investors than the risks the issuers must now provide in their disclosure documentation.....''

''....But there are signs ASIC is preparing the way to recommend changes to the law to prevent those not meeting minimum standards from raising money from the public. ASIC says it will establish a "task force" to review Banksia and the regulation of unlisted, unrated debentures. It says the task force's work may involve making recommendations to the federal Treasury about law reform, "given we have pushed the existing conduct and disclosure regime to its limit".....''

''...If the law cannot be amended to allow ASIC to stop debenture offerers playing fast with other people's money, then consideration should be given to handing regulation of them to the Australian Prudential Regulation Authority....''


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## ASICK (22 November 2012)

*"Everything's Relative" / APRA to the Rescue?*

http://www.heraldsun.com.au/busines...torians-millions/story-fndgp8b1-1226521527700

"FAILED lender Banksia made an $11 million loan to its parent company before it collapsed owing $660 million to thousands of mum-and-dad investors in country Victoria.

Receivers working to claw back money for Banksia's 15,000 investors are trying to recover the loan, which was made to a related company that is majority-owned by Banksia's directors and executives.

McGrathNicol has confirmed to the Herald Sun it is seeking to recoup the money from Securities Haldco Limited, the parent company of the 11 businesses which made up The Banksia Financial Group"

http://www.businessspectator.com.au...w-banks-pd20121121-29PDB?opendocument&src=rss

''In the wake of the $650 million collapse of financial group Banksia Securities, Financial Services Minister Bill Shorten has asked the Australian Prudential Regulation Authority (APRA) to help regulate the $4.5 billion unlisted debenture industry, which would likely result in minimum capital and liquidity standards for the sector, according to The Australian Financial Review.

Such reforms would require APRA to co-operate with the corporate regulator, the Australian Securities and Investments Commission (ASIC) to bridge a regulatory gap relating to the shadow banking system.

The sector has come under sharply increased scrutiny following the collapse of Banksia, as well as the collapse of Australian Capital Reserve, Provident Capital and City Pacific.

Currently capital benchmarks for the sector are voluntary, but ASIC wants to make them mandatory to put them roughly on par with banks in terms of regulation.''


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## ASICK (25 November 2012)

*Banksia's Lesson: investors, you are essentially alone*

http://afr.com/p/personal_finance/s...sson_investors_you_are_sRwTQeTdekT71dJdj9nobP

"Jonathan Shapiro 

They said it would never happen again. The collapse in 2005 of property financing firm Westpoint was branded a “national shame” and sparked a royal commission that was meant to overhaul the local regulatory framework and prevent a repeat.

But it has happened again.

The collapse of Banksia Financial Group, which has left $650 million of funds in jeopardy, is irrefutable proof that money lost by investors in Westpoint was largely in vain. More important, it is a timely reminder that individual investors cannot lean on the regulator to protect them."


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## k.smith (27 November 2012)

http://www.theaustralian.com.au/bus...ns-on-debentures/story-fn91wd6x-1226524502573

''...REGIONAL finance company Southern Finance Group suspended redemptions on debentures worth $277 million yesterday as it negotiated a series of asset sales to Bendigo and Adelaide Bank.

The shock freezing of funds follows last month's $660m collapse of the Kyabram-based debenture business Banksia Securities and arrives just days after ASIC announced it was setting up a taskforce to look into the industry....''

''....ASIC chairman Greg Medcraft has zeroed in on the $4.5 billion debenture sector in recent weeks, setting up an internal taskforce after the collapse of Banksia rocked central Victoria....''


''....Southern Finance was a member of the Provincial Finance Group, an umbrella organisation of mortgage funds which once counted Banksia Securities as a member.
Bendigo and Adelaide Bank told the exchange earlier that the bank had entered into a non-binding heads of agreement to acquire the loan book, certain investments, equipment finance assets and financial planning business of Southern Finance Group for $290m.....''

and this...

https://research.zecco.com/research/markets/news/story.asp?key=100-330i5221-1&lastPage=Index

''...Australian laws prevent other types of financial companies from trying to portray themselves as banks. There are questions about whether Banksia Financial Group, which recently collapsed with debts of $A660mn, had sought to do this. The company offered deposit accounts to customers and had a bank state branch (BSB) number, which had been loaned to it by the ANZ Banking Group. ANZ CEO Mike Smith said it is not for him to judge whether Banksia tried to portray itself as a bank....''

Mum and Dads beware... when is a " Bank State Branch" (BSB) not actually a BANK state branch...! !


----------



## k.smith (1 December 2012)

http://www.theaustralian.com.au/bus...operty-to-unwary/story-e6frgac6-1226527730061

''...ASIC commissioner Peter Kell recently told The Australian that self-managed super funds should not be "the preferred vehicle for dodgy property spruikers".

To show it means business, the Australian Securities & Investments Commission is establishing a taskforce on aggressive marketing of speculative property developments.

But while ASIC is to be applauded for its proactive stance on the issue, is the federal government guilty of sending out mixed messages about investing in property? I'm afraid that while ASIC is on the lookout for dodgy property spruikers, other arms of the federal government are spruiking dodgy property to unwary investors....''

''...Once again, I fear that investors see the government involvement as a stamp of approval for these investments. It's not.

The reality is that investors are now being wooed by advisers to use their SMSFs to buy DHA and NRAS properties. To my mind, these properties are wholly unsuitable for this investment purpose. If this situation is allowed to continue, we are sowing the seeds of a crisis that may well be reaped during the next property market cyclical downturn. Mr Kell, it's time to turn your attention to the complicity of government in promoting dodgy dealings....''



Also reminds me of the very official looking "seal"  represented as that of the Public Trustee of Queensland stamped on the front cover of the PDS of a certain mortgage fund where 12,000 unitholders, many which were SMSFs, have lost around 90% of their $$ ! !


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## ROE (1 December 2012)

SMSF is not for everyone, if you not good with money or cant identify risk in investment then you could do more harm to your money having SMSF...

SMSF from what I see around seem like a trendy thing to do but half the people who opt to open
SMSF has fricken no idea of how they invest that money.

who can regulate stupidity? there will be more of these stories to come.

they need to setup a testing regime to see if the guy/girl open up SMSF is fit to do so.
1. has he/she has any investment experience?
2. has he/she ever invest in the stock/property market and how long?
3. do they know what is the difference between government backed deposit vs Mortgage Back deposit etc...


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## k.smith (1 December 2012)

ROE said:


> SMSF is not for everyone, if you not good with money or cant identify risk in investment then you could do more harm to your money having SMSF...
> 
> SMSF from what I see around seem like a trendy thing to do but half the people who opt to open
> SMSF has fricken no idea of how they invest that money.
> ...




Well, there you go ...! Here's a list of people who are just not as smart as some others...  

12,000 investors in the City pacific First Mortgage Fund
10,000 in the MFS Premium Income Fund
15,000 in Banksia
+000s Equititrust, 000s+LM, +++ 000s in so many other funds......

http://www.triapartners.com/triapar...ksia hints at another SMSF disaster&type=NjQ=

''...The really shocking statistic was that of the 15 riskiest debenture issuers identified by ASIC in 2007, eight have since collapsed.  Perhaps we need all 15 to go before the Government and its regulators finally get to grips with deposit collection by non-banks....''

''...The reality – long predicted and obvious - is that SMSFs have become a honey pot which is irresistible to capital gatherers of every type, from major banks to property developers.  We have also noted increasing awareness of the segment overseas, from asset managers through to fraudsters.  I get periodic calls from what is clearly an offshore boiler room trying to get me to set up an SMSF so I can trade stocks with them...''

''... After 20 years in this industry I am convinced that most retail investors do not understand credit risk and never will....''


Most investors burnt in these disasters will never invest in these products  again. 
But I wonder who in GENERAL really understands even now how many complex issues can make up these schemes?
A look at ASICs webpage gives some clue as to how many new regulation papers have been published re MIS in the last four years. 

 the bottom line of all this is that in the end....

''...Taxpayers lose too.....''

Taxpayers end up supporting ''... half the people who opt to open SMSF..'' who you say have "... fricken no idea of how they invest that money....'' when as retirees they lose their funds and queue up at Centrelink.

That's AFTER taxpayers having already supported a national scheme which purpose is to provide for retirees.
Many people opt for SMSF in the belief that they can keep better tabs on their superannuation nest egg because they are disillusioned at the returns in the super funds.

http://www.smh.com.au/money/super-and-funds/super-bad-worst-funds-revealed-20111119-1noby.html

''...''What is the point of raising the super guarantee by 3 per cent and then losing 10 per cent of your investment every few years?'' Mr Haratsis said. ''We need to ask ourselves: are super funds too risky for most ordinary people, and are we right to effectively force 12 per cent of people's money into the stock market?''...''

I think Super should only be allowed in APRA approved investments.


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## Julia (1 December 2012)

ROE said:


> they need to setup a testing regime to see if the guy/girl open up SMSF is fit to do so.
> 1. has he/she has any investment experience?
> 2. has he/she ever invest in the stock/property market and how long?
> 3. do they know what is the difference between government backed deposit vs Mortgage Back deposit etc...



Great.  Let's extend the nanny state.

There are plenty of people who resist the tax advantaged status of Super (whether SMSF or public fund) because they do not trust governments not to plunder their savings in Super before they reach retirement, or to continue to push out the retirement age so those with their savings in Super will be precluded from accessing their own money when they want to retire..

Instead, they invest separately in stock markets, trade forex, buy property, whatever they decide, in order to ensure they can access their funds at any time.  The overriding aim, however, is to provide for a comfortable retirement.

What is to say these people will not stuff up their decisions as much or more than those holding their assets in SMSFs?

Are we then going to require some sort of licence be attained by every person investing in every potential avenue of investment?

Why single out SMSFs. most of which are producing returns which are superior to public super funds?
The idea of more and more legislation to protect people from themselves ultimately has the effect of reducing the human drive to take responsibility for their own outcomes.  The end result is potentially a nation of zombies.


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## k.smith (1 December 2012)

Julia said:


> Great.  Let's extend the nanny state.




..Nanny state? No, let's maintain the national objective that superannuation was designed to provide security for the population in their retirement years.




Julia said:


> ....There are plenty of people who resist the tax advantaged status of Super (whether SMSF or public fund) because they do not trust governments not to plunder their savings in Super before they reach retirement, or to continue to push out the retirement age so those with their savings in Super will be precluded from accessing their own money when they want to retire......




People who part with their compulsory 9% contributions are not in the category of which you speak. 
They have to place their compulsory contributions into an approved superannuation scheme. 
Talk of tax advantages just doesn't apply to  a lot of them as they are often not in the  financial position to make those tax advantaged extra contributions.
They part with 9% of their income with the understanding that it will be there for their retirement, and that should be protected.



Julia said:


> ...Instead, they invest separately in stock markets, trade forex, buy property, whatever they decide, in order to ensure they can access their funds at any time.  The overriding aim, however, is to provide for a comfortable retirement.....




Yes, I am aware that some people invest privately for those reasons.
And that within super there are more favorable tax advantages. 
And that for those on the top end of the tax scale, those favorable tax advantages are increased.

Super should not primarily be about a wealth creation vehicle for the financially literate (with the undefined certificate from the University of Finance! ) while the unsophisticated (without the undefined certificate !) are exposed to risk.



Julia said:


> .....What is to say these people will not stuff up their decisions as much or more than those holding their assets in SMSFs?
> 
> Are we then going to require some sort of licence be attained by every person investing in every potential avenue of investment?....




Super contributions are compulsory for all ... passing licence tests (whatever they may be) are failed by many. 
Gold star awards, passes, failures...they will keep happening in the financial marketplace.
But both your taxes and mine support superannuation and not the private investments that we or others choose to make.



Julia said:


> ....Why single out SMSFs. most of which are producing returns which are superior to public super funds?
> The idea of more and more legislation to protect people from themselves ultimately has the effect of reducing the human drive to take responsibility for their own outcomes.  The end result is potentially a nation of zombies.




For many working people the funds that they accumulate over their working lives in their superfunds is often the largest amount that they will accumulate in their lifetime. 
It should be protected and not exposed to risk so that it's there for them when they are retired.



Julia said:


> ...The idea of more and more legislation to protect people from themselves ultimately has the effect of reducing the human drive to take responsibility for their own outcomes.  The end result is potentially a nation of zombies.....




People who have worked hard all their lives and fulfilled their legal obligations by contributing to their super schemes have taken all the responsibilty for their outcomes that was required of them, and don't lack human drive. There should be legislation to protect  these ordinary working people from the often very sophisticated exploits of others.


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## So_Cynical (1 December 2012)

ROE said:


> SMSF is not for everyone.
> 
> who can regulate stupidity? there will be more of these stories to come.
> 
> ...




You cant regulate stupidity, the simple fact that its often successful people with lots of money to lose that are the victims of shonky investments would seem to indicate that they are not dumb, just bad decision makers when they step out side their financial comfort zones...switch from making money (familiar) to investing money (different).

I would hate to see any sort of SMSF appropriate intelligence test set-up, i hate how everything seems to get turned into an industry now so university leavers can have cushy jobs...look at the crap you have to go thru now just to drive a car in some eastern states.


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## Julia (1 December 2012)

k.smith said:


> ..Nanny state? No, let's maintain the national objective that superannuation was designed to provide security for the population in their retirement years.



So all the more reason for people to know what they are doing with it.

k.smith:  we will perhaps agree to disagree.  You apparently prefer to feel that someone else should protect you from making your own decisions.  I take the opposite view.
Pretty much end of discussion.


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## k.smith (2 December 2012)

So_Cynical said:


> You cant regulate stupidity, the simple fact that its often successful people with lots of money to lose that are the victims of shonky investments would seem to indicate that they are not dumb, just bad decision makers when they step out side their financial comfort zones...switch from making money (familiar) to investing money (different).....




I believe that it's more often the ordinary working people with  their lifetime savings to lose that are the victims of shonky investments.... and that is why ASIC is repeatedly warning of the threat to the SMSFs...

I'm glad that some are so comfortable in their financial comfort zones that their future is wonderful...but the reality is that lots of ordinary hardworking people have lost their a lot more than their comfort zone. 
"Making money" for many is working hard for a wage which includes a compulsory 9% super contribution, now gone.   



So_Cynical said:


> ......I would hate to see any sort of SMSF appropriate intelligence test set-up, i hate how everything seems to get turned into an industry now so university leavers can have cushy jobs...look at the crap you have to go thru now just to drive a car in some eastern states.




I agree with that ... too many industries within industries, too many "hangers-on".

Look at what happens when a MIS goes down, for example... the investor is last in the $$$ chain (although it was their $$$ that went in first)

Love the stats..."..Statistics: 103 Closed Trades since July 07, Winning Trades: 86, Losing Trades: 17, Expectancy/$1 Risked: $0.68.."

I wonder how many ordinary people have stats like that?


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## k.smith (2 December 2012)

Julia said:


> So all the more reason for people to know what they are doing with it.
> 
> k.smith:  we will perhaps agree to disagree.  You apparently prefer to feel that someone else should protect you from making your own decisions.  I take the opposite view.
> Pretty much end of discussion.




Yes, I will agree to disagree. But let me know when there is a education program which gives out diplomas where ALL can be confident that the decisions that they make will first and foremost preserve the nest egg that they have saved. I will keep discussing ... the sight of 400 elderly MFS investors on a bleak winters day in 2008 just makes me do it...


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## So_Cynical (2 December 2012)

k.smith said:


> I'm glad that some are so comfortable in their financial comfort zones that their future is wonderful...but the reality is that lots of ordinary hardworking people have lost their a lot more than their comfort zone.
> "Making money" for many is working hard for a wage which includes a compulsory 9% super contribution, now gone.




Don't go mixing me up with the haves and have nots...i most certainly belong in the have not camp. 




k.smith said:


> Love the stats..."..Statistics: 103 Closed Trades since July 07, Winning Trades: 86, Losing Trades: 17, Expectancy/$1 Risked: $0.68.."
> 
> I wonder how many ordinary people have stats like that?




The stats are an accurate reflection of what i have done and where my strategy has lead me since 2008, probably not ordinary or average...but certainty not extraordinary.

--

The mind set of the person looking to accumulate wealth in the markets is certainly different to the person trying to hang on to wealth or grow that wealth beyond the norm...perhaps to many think that 6 or 7 or 8% is all to easy so fall into the trap of thinking this is so?


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## Julia (2 December 2012)

k.smith said:


> Love the stats..."..Statistics: 103 Closed Trades since July 07, Winning Trades: 86, Losing Trades: 17, Expectancy/$1 Risked: $0.68.."
> 
> I wonder how many ordinary people have stats like that?



I wonder how many 'ordinary people' have worked as hard at learning his craft as So Cynical?
From what I know of him, he has absolutely not come from privileged circumstances and has doggedly kept at acquiring education and skills for some years.  Yes, now he is profitable and deserves to be.

It's a choice.  Put in the work, drop the victim mentality, and it's entirely possible.


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## ASICK (2 December 2012)

Julia said:


> I wonder how many 'ordinary people' have worked as hard at learning his craft as So Cynical?
> From what I know of him, he has absolutely not come from privileged circumstances and has doggedly kept at acquiring education and skills for some years.  Yes, now he is profitable and deserves to be.
> 
> It's a choice.  Put in the work, drop the victim mentality, and it's entirely possible.




Julia, I wonder how you'd go telling the hard-working folk who invested (and will lose) in Banksia, "if it's entirely possible, drop the victim mentality"? I mean, face to face, just to see if they'd appreciate your  thoughful advice.   I would have thought the ones who cry would be the ones who'd be helped to recovery by telling them, "get over it - it's your fault, you didn't do your homework".


----------



## Julia (2 December 2012)

ASICK said:


> Julia, I wonder how you'd go telling the hard-working folk who invested (and will lose) in Banksia, "if it's entirely possible, drop the victim mentality"? I mean, face to face, just to see if they'd appreciate your  thoughful advice.   I would have thought the ones who cry would be the ones who'd be helped to recovery by telling them, "get over it - it's your fault, you didn't do your homework".



The GFC built up over months.  The situation was all over the media for all this time.
The collapse of Lehmans in 2008 prompted governments all over the world to act.
The Australian government announced a government guarantee of all savings in banks, building societies, credit unions.  All of these institutions very quickly responded with massive advertising that they were GOVERNMENT GUARANTEED across print and electronic media.   

It's pretty hard to imagine that anyone could have missed not only the advertising but the ongoing warnings of government to protect savings by ensuring they were held in an institution which carried the guarantee.

If savings had been placed in an institution prior to this, the holder of such a deposit simply had to ask that institution "Are my savings with your organisation guaranteed by the Government Guarantee?"
If they were not, surely you'd remove them in favour of an organisation that did qualify?

k.smith said 







> Yes, I will agree to disagree. But let me know when there is a education program which gives out diplomas where ALL can be confident that the decisions that they make will first and foremost preserve the nest egg that they have saved.



That is just a facetious comment.  No one needed any sort of fancy qualification to take notice of what I've outlined above.

There was also the suggestion that So Cynical was unduly talented, or came from a privileged situation, rather than any acknowledgement that he has achieved profitability through personal determination to do so.  He could equally have said 'oh it's all too hard'.   

I'm very sorry that people have lost money (though as I understand the Banksia situation, it's unclear as to how much is lost), and I understand how absolutely distressing this is especially for elderly people.
But that is no reason to suggest e.g. anyone opening a SMSF has to sit some sort of test.  As I've said, if you're going to go to that extent, you should equally apply the same test to anyone investing in anything.


----------



## ASICK (2 December 2012)

*Eye-to-Eye*



Julia said:


> The GFC built up over months.  The situation was all over the media for  all this time.
> The collapse of Lehmans in 2008 prompted governments all over the world to act. The Australian government announced a government guarantee of all savings in banks, building societies, credit unions.  All of these institutions very quickly responded with massive advertising that they were GOVERNMENT GUARANTEED across print and electronic media.
> 
> It's pretty hard to imagine that anyone could have missed not only the advertising but the ongoing warnings of government to protect savings by ensuring they were held in an institution which carried the guarantee.
> ...




So, in a word, how would you best describe a person who invested his life's savings in Banksia? and in a sentence, what would you say [directly, eye-to-eye] to an investor who lost her life's savings in Banksia?


----------



## k.smith (2 December 2012)

Julia said:


> I wonder how many 'ordinary people' have worked as hard at learning his craft as So Cynical?
> From what I know of him, he has absolutely not come from privileged circumstances and has doggedly kept at acquiring education and skills for some years.  Yes, now he is profitable and deserves to be.
> 
> It's a choice.  Put in the work, drop the victim mentality, and it's entirely possible.




Do you really believe it is "entirely possible" for all 468,000 SMSFs to "put in the work" and become proficient at smart risk allocation?
I am sure that even with "personal determination"  for some it isn't... 

http://www.dailytelegraph.com.au/even-the-experts-concede-confusion/story-fn6ccy9u-1226179645140
''... 82 per cent had either never heard or didn't know the meaning of the popular banking phrase loan to value ratio which is the loan amount divided by the value of the property or asset, expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in an LVR of 80 per cent. Some thought it was a little like shares, or something that happened when interest rates were too high....''

I have never heard of the expression "unduly talented" and I have lots of admiration for people who achieve success through hard work and self education. 
But the issue is not about the skill of making profits, or knowing how to save.
*The issue* is losing a lifetime of compulsory super contributions because SMSFs (themselves regulated) can invest in what are "approved" investments in a MIS schemes( which appeared to be regulated to many of us, but  are not regulated)
Investors decimated in failed MIS funds are now the recipients of a new influx of propaganda material from their fund managers spruiking a rehash of the same @%%$$$ all over again. 
In the post GFC financial marketplace, with the tabloids warning of further upheavals on an almost daily basis and with interest rates at the banks falling to very low levels the time is ripe for propaganda spruiking "reliable income" with high % interest to reach it's mark. Beware Beware....Risk entering more risk !


----------



## k.smith (2 December 2012)

Julia said:


> The GFC built up over months.  The situation was all over the media for all this time.
> The collapse of Lehmans in 2008 prompted governments all over the world to act.
> The Australian government announced a government guarantee of all savings in banks, building societies, credit unions.  All of these institutions very quickly responded with massive advertising that they were GOVERNMENT GUARANTEED across print and electronic media.
> 
> It's pretty hard to imagine that anyone could have missed not only the advertising but the ongoing warnings of government to protect savings by ensuring they were held in an institution which carried the guarantee.




Perhaps the name "Banksia"  and that they have a BSB number, and, as I understand it, that the branches were staffed by locals were all factors that contributed to investors feeling that they were in a bank? I find it hard to imagine that anyone would expose their savings, let alone their super, where it would knowingly be at risk.  Your comments just highlights again how it is APRA intervention rather than education that is needed to preserve superannuation capital.


----------



## Julia (2 December 2012)

*Re: Eye-to-Eye*



ASICK said:


> So, in a word, how would you best describe a person who invested his life's savings in Banksia? and in a sentence, what would you say [directly, eye-to-eye] to an investor who lost her life's savings in Banksia?



I'm not obliged to make  judgements about anyone.   This is a stock and investment forum.
It is an environment where anyone can make what they consider a relevant comment on the topic.
I have simply pointed out some basic facts.  You have chosen to ignore these.

And, as far as anyone investing 'their life savings' in any one institution, that makes no sense.
Even the best run financial organisations can fall over.  There was great belief in Lehmans in the US, yet it collapsed.

Even amongst the big four banks in Australia, all of which are well regulated and responsible, I'd never place 'all my life savings' with any of them, but rather divide it up in order to mitigate even remote risk.


----------



## Julia (2 December 2012)

k.smith said:


> Do you really believe it is "entirely possible" for all 468,000 SMSFs to "put in the work" and become proficient at smart risk allocation?
> I am sure that even with "personal determination"  for some it isn't...



 I have not suggested every person is going to be motivated to educate themselves to the level of being able to successfully trade shares for themselves, as demonstrated by a forum member earlier on this thread.
What I am suggesting, however, that it is absolutely not beyond a reasonable suggestion to think that anyone in 2008 should have been aware of the government guarantee and should have checked their investments accordingly, or especially if placing new money with any institution, similarly checked that the funds were government guaranteed.  As I have already described, the situation was hugely reported and advertised.  



> ''... 82 per cent had either never heard or didn't know the meaning of the popular banking phrase loan to value ratio which is the loan amount divided by the value of the property or asset, expressed as a percentage. For example, a loan of $400,000 to buy a property worth $500,000 results in an LVR of 80 per cent. Some thought it was a little like shares, or something that happened when interest rates were too high....''



That has nothing to do with the simplicity of checking that any funds invested were eligible for the Government Guarantee.
If you don't understand a term, all you have to do is Google the phrase, and dozens of appropriate explanations will come up.  
Or ask the question on this forum.  Someone will explain the same day.



> Investors decimated in failed MIS funds are now the recipients of a new influx of propaganda material from their fund managers spruiking a rehash of the same @%%$$$ all over again.
> In the post GFC financial marketplace, with the tabloids warning of further upheavals on an almost daily basis and with interest rates at the banks falling to very low levels the time is ripe for propaganda spruiking "reliable income" with high % interest to reach it's mark. Beware Beware....Risk entering more risk !



Indeed.  All the more reason for people to check out potential investments and especially to remember that *if the offer is of a higher interest rate than is being paid elsewhere, there is a reason for this, and this reason is essentially that it entails more risk.*



k.smith said:


> Perhaps the name "Banksia"  and that they have a BSB number, and, as I understand it, that the branches were staffed by locals were all factors that contributed to investors feeling that they were in a bank? I find it hard to imagine that anyone would expose their savings, let alone their super, where it would knowingly be at risk.  Your comments just highlights again how it is APRA intervention rather than education that is needed to preserve superannuation capital.



Why does the fact that the branches were 'staffed by locals' mean the investment is safe?  I don't see any connection.
As far as education is concerned, OK, fine with me if you continue to regard this as unnecessary, and to encourage others to similarly be in denial.  Up to you entirely.


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## Judd (2 December 2012)

Maybe if k.smith would like to do research such as this rather than spread an ideology.....

http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23


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## Judd (2 December 2012)

Omitted to add a bit about BSBs



> What is a BSB number?
> 
> A BSB number (or Bank/State/Branch number) is used for the purpose of abbreviating a customer's bank information. It is far easier to assign a customer a BSB number than to have a customer remember a large string of text. Instead, a short array of numbers is assigned in a block that can be easily deciphered by any bank or business to determine pertinent bank account information.




Took less than one minute to Google that.  Read the description very, very carefully.  Then think.  Then ask yourself the question in relation to Banksia who was the customer?


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## k.smith (2 December 2012)

Judd said:


> Maybe if k.smith would like to do research such as this rather than spread an ideology.....
> 
> http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23





http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23
''...Self-managed super funds: A statistical overview 2009-10..''

Want a break down of how my losses are being accounted for in my SMSF?

The worst will actually hit the books this financial year.


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## k.smith (3 December 2012)

Judd said:


> Omitted to add a bit about BSBs
> 
> 
> 
> Took less than one minute to Google that.  Read the description very, very carefully.  Then think.  Then ask yourself the question in relation to Banksia who was the customer?




http://afr.com/p/national/shadow_banks_face_crackdown_SjC9MuhMMNJYO32Z8I6AVP
''...The regulator is also concerned about the use of automatic teller machines in some branches, while government sources are concerned about such companies obtaining bank state branch (BSB) numbers assigned to real banks...''

''...Many non-bank finance companies advertise that they offer “savings accounts” and “at call deposit accounts”, terms that are typically associated with banks. Banksia’s access to a BSB assigned to ANZ Banking Group allowed it to offer transaction accounts into which clients had their salaries and Centrelink payments paid...''

For the record, I am NOT a Banksia investor.


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## k.smith (3 December 2012)

Julia said:


> I have not suggested every person is going to be motivated to educate themselves to the level of being able to successfully trade shares for themselves, as demonstrated by a forum member earlier on this thread.
> What I am suggesting, however, that it is absolutely not beyond a reasonable suggestion to think that anyone in 2008 should have been aware of the government guarantee and should have checked their investments accordingly, or especially if placing new money with any institution, similarly checked that the funds were government guaranteed.  As I have already described, the situation was hugely reported and advertised..




The funds that I am exposed to froze early in 2008. Like so many in this fund, my 24 month investment was made prior to the fund's deconsolidation from the parent company, well before the debt facility blew out, and well before the last PDS was issued.

Up until 2008, the words "Government Guarantee" were hardly mentioned.

I am not an investor with Banksia. I made my comments about Banksia in reply to this question in a previous post.



Julia said:


> That has nothing to do with the simplicity of checking that any funds invested were eligible for the Government Guarantee.
> If you don't understand a term, all you have to do is Google the phrase, and dozens of appropriate explanations will come up.
> Or ask the question on this forum.  Someone will explain the same day.




I know that the investors in the funds that I am exposed in average age in now around 75 yrs.old. Few use computers (although my experience is that a lot of them are learning of late...)



Julia said:


> Indeed.  All the more reason for people to check out potential investments and especially to remember that *if the offer is of a higher interest rate than is being paid elsewhere, there is a reason for this, and this reason is essentially that it entails more risk.*





I have a pretty healthy appraisal re risk these days. So do you. I would check them out. So would you. 
But then we know about risk, don't we? Lot's still don't, should, won't and can't.  




Julia said:


> Why does the fact that the branches were 'staffed by locals' mean the investment is safe?  I don't see any connection.
> As far as education is concerned, OK, fine with me if you continue to regard this as unnecessary, and to encourage others to similarly be in denial.  Up to you entirely.




please google...

http://www.heraldsun.com.au/news/vi...hanging-fortunes/story-e6frf7kx-1226528476112
and 

http://www.triapartners.com/triapar...ksia hints at another SMSF disaster&type=NjQ=


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## Judd (3 December 2012)

k.smith said:


> http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=23
> ''...Self-managed super funds: A statistical overview 2009-10..''
> 
> Want a break down of how my losses are being accounted for in my SMSF?
> ...




Any losses in your SMSF is a result of your decisions. It is disingenuous to then translate your loses as also being applicable to other SMSFs the trustees of which have made different and probably better decisions than you.

And I don't have an SMSF.


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## k.smith (3 December 2012)

Judd said:


> Any losses in your SMSF is a result of your decisions. It is disingenuous to then translate your loses as also being applicable to other SMSFs the trustees of which have made different and probably better decisions than you.
> 
> And I don't have an SMSF.




There are 12,000 unitholders in the Pacific First Mortgage Fund.
Net loss attributable to unitholders for the year ended 30 June 2012, after impairment losses of $143,932,955 (2011 : Loss 87,565,011) totalled $128,785,463 (2011 : Loss $63,910,239)

Just one MIS disaster of many.
MY decision has taught me a lesson, and the experience has taught me that investing in MIS exposes one to  the risk that one can loss all of one's investment. SMSFs should not be exposed to such risk. It is against what super is intended for, and what we as a nation support.


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## Judd (3 December 2012)

k.smith said:


> There are 12,000 unitholders in the Pacific First Mortgage Fund.
> Net loss attributable to unitholders for the year ended 30 June 2012, after impairment losses of $143,932,955 (2011 : Loss 87,565,011) totalled $128,785,463 (2011 : Loss $63,910,239)
> 
> Just one MIS disaster of many.
> MY decision has taught me a lesson, and the experience has taught me that investing in MIS exposes one to  the risk that one can loss all of one's investment. SMSFs should not be exposed to such risk. It is against what super is intended for, and what we as a nation support.




http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=21&H21

As at 30 June 2010, the average asset allocation for SMSF's in "Other Managed Investments" was 5.1%. "Listed Trusts" 5.1%, "Unlisted Trusts" 8.9%.  So some were/are more and some/are less.  Haven't a clue what percentage your SMSF was exposed was to in that regard and I don't care but again stop assuming that your decisions are also made by the vast majority of trustees of SMSFs.


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## k.smith (3 December 2012)

Judd said:


> http://www.ato.gov.au/superfunds/content.aspx?menuid=0&doc=/content/00316375.htm&page=21&H21
> 
> As at 30 June 2010, the average asset allocation for SMSF's in "Other Managed Investments" was 5.1%. "Listed Trusts" 5.1%, "Unlisted Trusts" 8.9%.  So some were/are more and some/are less.  Haven't a clue what percentage your SMSF was exposed was to in that regard and I don't care but again stop assuming that your decisions are also made by the vast majority of trustees of SMSFs.




I'm not here to discuss the specifics of my SMSFs portfolio.
The fact is that tens of thousands of people have lost their savings in MISs. 
I know for a fact (because I have a copy of the fund register of unitholders) that there is a large exposure by SMSFs in this fund, which suggests to me that this would also be the case in other such funds.
Now that I understand the risk that one can lose not just some, but ALL of their capital investment in such schemes,( not clearly disclosed in the PDS at the time of investing imo) it defies logic that such investments can be appropriate for SMSFs.


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## Judd (3 December 2012)

k.smith said:


> I'm not here to discuss the specifics of my SMSFs portfolio.




You weren't asked to.  You're the one who raised the matter of your SMSFs losses.



k.smith said:


> The fact is that tens of thousands of people have lost their savings in MISs.
> I know for a fact (because I have a copy of the fund register of unitholders) that there is a large exposure by SMSFs in this fund, which suggests to me that this would also be the case in other such funds.
> Now that I understand the risk that one can lose not just some, but ALL of their capital investment in such schemes,( not clearly disclosed in the PDS at the time of investing imo) it defies logic that such investments can be appropriate for SMSFs.




And I enquire again, many lost money who invested in MIS outside of the SMSF structure so is it implied that all MIS are banned, regulated by APRA or doesn't that matter?  Carry the logic presented in regard to regulation of MIS to a conclusion and do not focus on a particular structure for investing as that is all an SMSF is despite the tax concessions.


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## k.smith (3 December 2012)

Judd said:


> You weren't asked to.  You're the one who raised the matter of your SMSFs losses.
> 
> 
> 
> And I enquire again, many lost money who invested in MIS outside of the SMSF structure so is it implied that all MIS are banned, regulated by APRA or doesn't that matter?  Carry the logic presented in regard to regulation of MIS to a conclusion and do not focus on a particular structure for investing as that is all an SMSF is despite the tax concessions.





The issue of private losses suffered outside of SMSFs is a separate one.
The government doesn't concern itself with strategy or purpose when people make personal investment decisions. 
The point is that SMSFs are structures which enjoy tax concessions and tax benefits supported by every taxpayer in Australia.
This makes them different to private investment structures 
Hence the government has an interest in SMSFs ..

[url ]http://www.theaustralian.com.au/business/wealth/trio-aftershock-runs-through-smsfs-the-case-has-reignited-concerns-over-the-safety-of-self-managed-super-funds/story-e6frgac6-1226043477096[/url]

''....The government is certainly prescriptive on how a SMSF is run. Under the "sole purpose" test set out in the SIS Act, the trustees must ensure that the fund is maintained for the sole purpose of providing retirement benefits to members. The trustees must "formulate and implement" an investment strategy for the fund, "having regard to liabilities, risk and return, diversification and liquidity".
....''

In it's REGULATION IMPACT STATEMENT for Unlisted property schemes: Update to RG 46 dated March 2012 ASIC wrote

 http://www.asic.gov.au/asic/pdflib.nsf/LookupByFileName/RIS-update-RG%2046-published-28-3-2012.pdf/$file/RIS-update-RG%2046-published-28-3-2012.pdf    

(please cut and paste the link)

   ''....Our conclusions are as follows:

(a) The structure of unlisted property schemes and the associated risks mean that they are different to other financial products offered to investors.

(b) The disclosure of the risks of these products has in many cases been insufficient to ensure that retail investors are provided with adequate information about the unlisted property scheme and whether the products will meet their investment needs, objectives and risk profile.

(c) Because the PDS is the primary document provided to retail investors, the information it contains must be of high quality to address the information needs of retail investors. However, we have concerns about the general quality and comparability of information for retail investors in PDSs for unlisted property schemes. If PDSs fail to disclose key information in a clear, concise and effective manner such that investors can easily identify it, investors are less likely to understand these products.

(d) The problem can be characterised as one of market failure through asymmetric availability of information. Investors do not have access to sufficiently clear information about unlisted property schemes because the current product disclosure information available to them does not describe the risks of the product clearly enough. As a result, investors may not receive the information they require to make an informed decision about whether to invest.
...''

( it goes on ....)


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## Judd (4 December 2012)

So in your view it is OK for the 70 yo, who has struggled to put aside $10,000 or so to pay for his/her funeral or pass on to their children, to lose that because it is not in superannuation?  However, as much as I disagree with it, it is your view and you are obviously entitled to hold that opinion.


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## k.smith (4 December 2012)

Judd said:


> So in your view it is OK for the 70 yo, who has struggled to put aside $10,000 or so to pay for his/her funeral or pass on to their children, to lose that because it is not in superannuation?  However, as much as I disagree with it, it is your view and you are obviously entitled to hold that opinion.




No, I did not say that.
I said that is a different issue.
I am saying that  superannuation savings should not be exposed in these schemes.


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## Judd (4 December 2012)

We have a different perspective on this issue.  To me it matters not whether funds are invested directly or via superannuation.  The effect of losing those funds is the same on the people involved and just as damaging  As far as I am concerned that is the prime issue not a tax structure.  To consider only that aspect is, to my way of thinking, too narrow and blinkered.  And if it is legal to invest in a product outside of superannuation then it should also be legal to invest through superannuation be it, unlisted funds, art work, CFD's options or forex.


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## k.smith (4 December 2012)

Judd said:


> We have a different perspective on this issue.  To me it matters not whether funds are invested directly or via superannuation.  The effect of losing those funds is the same on the people involved and just as damaging  As far as I am concerned that is the prime issue not a tax structure.  To consider only that aspect is, to my way of thinking, too narrow and blinkered.  And if it is legal to invest in a product outside of superannuation then it should also be legal to invest through superannuation be it, unlisted funds, art work, CFD's options or forex.




My perspective on this issue is that it matters a great deal.
Unlike privately invested $$$, funds invested through super enjoy tax concessions which we all as taxpayers we pay for.
Why should a taxpayer support tax concessions on funds invested in schemes where ALL the investment can be lost?  

perhaps these links may illustrate how different super investment is compared to private investment...
http://www.theaustralian.com.au/nat...super-tax-breaks/story-fn59nsif-1226526153194
''....Treasury's in-house modelling of superannuation benefits has highlighted the uneven distribution, with the highest-earning 10 per cent of the population receiving 36.1 per cent of the $15.5 billion in tax concessions on superannuation contributions...''

http://www.smh.com.au/business/treasury-secretary-cracks-the-super-whip-20121202-2aoxr.html
''..Apart from the motor industry, there are not many sectors greedier in their rent-seeking than the super sector. Dr Parkinson took the opportunity to remind the funds in person he is no soft touch. How is this for frankness: ''The government ensures the superannuation sector is provided with a steady, guaranteed and concessionally taxed supply of money. No other industry has this guarantee. None.''


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## Judd (4 December 2012)

Most interesting.

Trio Capital
ION
HIH
GIO
Centro
Quintex
Bond Corporation
Sonray Capital,

to name but few, were subject to regulatory and auditory requirements.  What were the outcomes?

Evangelise away, bro.  You are merely wasting bandwidth.


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## k.smith (4 December 2012)

Judd said:


> Most interesting.
> 
> Trio Capital
> ION
> ...




from another Evangelist...


http://www.moneymanagement.com.au/o...nger/the-structure-of-unlisted-property-funds 

that was written in 2010

( before Banksia collapsed)


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## ASICK (11 December 2012)

*50 - 65%? Ho Hum*

http://www.smh.com.au/business/banksia-investors-get-first-payment-20121207-2b0n4.html


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## k.smith (11 December 2012)

http://www.bendigoadvertiser.com.au/story/1177702/burnt-banksia-investors-deserve-truth/?cs=82
''....The company collapsed with debts of $663 million after being given a clean bill of financial health from a Bendigo auditor only weeks earlier. 

Most of those who lost out were pensioners and retirees. ...''

http://consumeraction.org.au/consum...unsupervised-finance-and-debenture-companies/
''...‘We’re concerned that, as things stand, debenture companies are allowed to look and feel like banks when they’re nowhere near as tightly regulated’ said Gerard Brody, Director of Policy & Campaigns at Consumer Action.

Consumer Action believes that written disclosure about the high risk nature of debenture investments in  product information statements is undermined by the way some of these companies operate and present themselves. For example, the ability to rent Bank-State-Branch Numbers, commonly known as BSB numbers, can lead people to feel like they’re depositing their money into a traditional bank account.

We understand that the selling of BSB numbers is relatively common practice.  But we believe this practice has been allowed to develop without regard for its potential impact on consumers.  it is timely to examine what rules and responsibility should be placed on entities selling and buying BSBs.

‘Current regulation on debentures relies on “disclosure and investor education”. But any disclosure or education about risk is countered by their use of BSB numbers, in-branch ATMs and account offerings that look like regular savings accounts. We need to ask why a company like Banksia was allowed to look and feel like a bank – it’s confusing to say the least and has the potential to mislead inexperienced investors.

‘It’s often said that if it walks like a duck and quacks like a duck, it’s probably a duck. But, in the case of debenture companies, it can look like a bank and sound like a bank, but is certainly isn’t a bank,’ said Mr Brody....''


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## k.smith (14 December 2012)

http://afr.com/p/national/asic_investor_exam_plan_won_work_Z7iudWpcSNl8g6IGkfXg6O

''....Investors, brokers and market experts have rejected a proposal by the corporate regulator to force investors in risky or complex products to pass an online exam.

Australian Securities and Investments Commission chairman Greg Medcraft told The Australian Financial Review he had grave concerns about the growth in the number of self-managed super funds delving into complex and risky products, following collapses including Banksia Securities, Trio Capital, Storm Financial and MF Global.

Figures from the Australian Taxation Office on Friday reveal that do-it-yourself super funds have almost doubled since 2004, from 271,000 to 478,000 and hold more than $435 billion in assets.

“I wake up in the middle of the night thinking that the growth of self-managed super funds is just all going to end in tears and we will see a repeat of Storm Financial,” said chairman of consumer group Choice Jenni Mack, who sits on ASIC’s advisory panel.....''

''....No matter how many layers of protection investors have, the ultimate protection is themselves. If they don’t understand or think that they are being hoodwinked, then they should just say no.”
....''

??what if they did understand on the available information given to them at the time and are still hoodwinked?


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## ASICK (29 December 2012)

*No Time for Talk - Action !*

http://www.abc.net.au/news/2012-12-14/receivers-consider-suing-banksia-directors/4428922

http://www.perthnow.com.au/news/ban...ng-back-millions/story-e6frg12c-1226544727940


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## Garpal Gumnut (29 December 2012)

k.smith said:


> http://www.bendigoadvertiser.com.au/story/1177702/burnt-banksia-investors-deserve-truth/?cs=82
> ''....The company collapsed with debts of $663 million after being given a clean bill of financial health from a Bendigo auditor only weeks earlier.
> 
> Most of those who lost out were pensioners and retirees. ...''
> ...




I predicted something like this would happen, about now, two years ago , on the Storm Financial thread. I get no pleasure from being correct.

Education, education, education is essential for all investors.

And not from Financial Advisers.

" Never ask a barber if you need a haircut "

gg


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## Julia (29 December 2012)

Garpal Gumnut said:


> I predicted something like this would happen, about now, two years ago , on the Storm Financial thread. I get no pleasure from being correct.
> 
> Education, education, education is essential for all investors.



Those of us who made this recommendation on the Storm thread were soundly abused for our suggestion.


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## Garpal Gumnut (30 December 2012)

Julia said:


> Those of us who made this recommendation on the Storm thread were soundly abused for our suggestion.




Another mob of muppets with a similar range of "expertise" have just opened a new financial centre on one of our major thoroughfares in Townsville, usual bling and awning out the front, and a webpage costing at least $120.

Next time I'm over that way I'll take some prunes before I go and visit the ablutions. 

Some thankless bastard stole a gold tap from the men's in the Ross Island Hotel. 

I'd be sure to find a replacement.

There will be more, and more, and more Banksias.

ASIC are to blame in the end.

gg


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## So_Cynical (30 December 2012)

Its looking more and more like the financial services industry is ganging up with consumer groups, regulation groups and various rule enforcement agency's to kill off the spectacular growth in SMSF's, even though the average SMSF is achieving a return far superior to industry and commercial funds...go figure.


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## ASICK (8 January 2013)

*Keepin' the Thread Alive*

http://www.heraldsun.com.au/news/vi...rges-for-banksia/story-e6frf7kx-1226537184720

http://www.heraldsun.com.au/busines...ng-back-millions/story-fndgp8b1-1226544727940

http://www.standard.net.au/story/12...ry-fund-directors-liability-not-issue/?cs=383

"THE amount of insurance carried by directors of the failed Banksia Securities and Cherry Fund companies should not determine if they were sued for allegedly not carrying out their duties properly, the solicitor handling a class action legal case against them said."

I guess that's something a lawyer making money might say - but, there's little point paying a lawyer to sue if there's nothing in it for the client: Size (of the likely return from litigation) really does matter.


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## Garpal Gumnut (8 January 2013)

*Re: Keepin' the Thread Alive*



ASICK said:


> http://www.heraldsun.com.au/news/vi...rges-for-banksia/story-e6frf7kx-1226537184720
> 
> http://www.heraldsun.com.au/busines...ng-back-millions/story-fndgp8b1-1226544727940
> 
> ...




Agree , Directors are personally liable under Corporation Law, and this mob will probably be sued to the hilt, up to and way beyond their insurance levels.

Generally though directors often have passed their wealth on to various partners, children, hookers, parents, or grandparents.

So the Banksia victim's money may at this very moment be tucked in to some lingerie, with or without mothballs.

gg


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## ASICK (9 January 2013)

*There's no Harm in Dreaming*

http://www.mmg.com.au/local-news/kyabram/investors-offered-voice-1.38982

‘‘If we can tell the receiver that at a meeting in Kyabram on January 14 so many hundreds of people unanimously supported what was proposed you would be disappointed if the receiver didn’t take some notice.’’

Well, there's no harm to dream.  However, as an avid reader of crystal balls, I'd be surprised if investors could sway any decision by a receiver. "Tea or coffee anyone? Don't eat too many 'Ginger Nuts' - oh! and don't forget to sign the non-disclosure agreement".

More on Banksia:

http://www.bendigoadvertiser.com.au...-accountants-investigated-over-banksia/?cs=80


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## k.smith (17 January 2013)

www.standard.net.au/story/1232440/banksia-legal-action-details-revealed/?cs=72 

''...BANKSIA investors will be contacted within the next 30 days to give them more information about a class action legal case on their behalf against the Banksia directors and auditors.
The solicitor organising the class action, Mark Elliott, said a letter to be sent to investors in Banksia Securities (BSL) and the associated Cherry Fund (CFL) would explain the class action, provide a summary of the proceedings and give details of the legal people organising the class action....''

''...The class action, which was lodged with the Supreme Court of Victoria, alleges The Trust Company failed to adequately supervise the financial position and viability of BSL and CFL to protect the interest of the holders of debentures and/or unsecured deposit notes issued by BSL and CFL....''

Other parties named as defendants in the class action are the directors of BSL and CFL who are alleged not to have adequately managed the two companies, and the auditors who are alleged to have failed to adequately audit BSL and CSL’s books or report any breaches of law to the Australian Securities and Investments Commission (ASIC)...''


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## ASICK (27 March 2013)

http://www.smh.com.au/business/property/banksia-lost-out-on-developer-loans-20130326-2gsir.html


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## k.smith (19 April 2013)

''....The financial regulator is proposing tougher rules on non-bank finance companies that accept retail deposits after a string of collapses in the "shadow banking" sector....''

Read more: http://www.smh.com.au/business/crackdown-on-shadow-banking-20130419-2i4jn.html#ixzz2QtBqf9wN

The APRA document can be read here
http://www.apra.gov.au/MediaReleases/Pages/13_09.aspx


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## k.smith (22 April 2013)

https://www.netwealth.com.au/librarymanager/libs/41/netwealth_list_of_suspended_funds.pdf


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## DavidJimenez (20 May 2013)

*Re: Keepin' the Thread Alive*



Garpal Gumnut said:


> Agree , Directors are personally liable under Corporation Law, and this mob will probably be sued to the hilt, up to and way beyond their insurance levels.
> 
> Generally though directors often have passed their wealth on to various partners, children, hookers, parents, or grandparents.
> 
> ...




it is cause of shame but still most directors passed there wealth to various partners and on family members. I think there is nothing wrong in it


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## DavidJimenez (21 May 2013)

*Re: Keepin' the Thread Alive*



DavidJimenez said:


> Agree , Directors are personally liable under Corporation Law, and this mob will probably be sued to the hilt, up to and way beyond their insurance levels.
> 
> Generally though directors often have passed their wealth on to various partners, children, hookers, parents, or grandparents.
> 
> ...




What is your opinion friends?


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