Macquarie welcomes SOA clarification

19 December 2005

Macquarie Adviser Services’ Head of Cash Product and Marketing, Kathy Vincent, today said the legislation passed today exempting advisers from issuing Statements of Advice for simply recommending usage of Cash Management Trusts (CMTs) was a welcome clarification.

The legislation will come into force as of Tuesday 20 December.

Ms Vincent said the Government clearly understood that CMTs are generally low risk products, similar to bank deposit accounts, and are well understood by consumers.

“The removal of the need for an SOA will make it simpler for advisers to recommend CMTs as the central cashflow management system for all of their client’s cash,” Ms Vincent said.

“CMTs have become a vital part of advisers’ business, providing them with a simple and streamlined way of managing their clients’ cash needs.

“For advisers to have to issue an SOA everytime they recommended the use of a CMT, which would be used as the basis of managing their clients’ cash, would have placed an unnecessary burden on them.

“This is the reason that we lobbied the Government so vigorously on their behalf.”

“The Government’s removal of the general requirement of an SOA for recommending CMTs is part of a package of measures designed to streamline regulation of the financial services industry in a common sense way,” Ms Vincent said.

“This decision shows the Government is interested in the efficiency of financial advisers’ businesses and in ensuring that the regulation that covers the industry is appropriate,” Ms Vincent said.

She said today’s legislation acknowledges the fact that CMT’s provide a specific alternative to basic deposit products and are more generally used as a “bank” account solution as the cash hub for settlements and investments.

The legislation passed today sought to redress an issue whereby advisers were  required to issue SOAs for CMTs because CMTs were financial products.

“The Government has accepted the arguments put to it by Macquarie and  the Investment and Financial Services Association (IFSA) and has amended a provision of the legislation that made the lives of advisers and investors unnecessarily difficult,” Ms Vincent said.

“The nature of the investment, the transactional features and functionality of CMTs are well understood by consumers. Unlike other managed funds, CMTs allow clients to withdraw funds without prior notice, have ongoing account management fees, allow users to use Bpay, transfer funds, direct debit, periodic payments, internet banking and regular investment plans.

““The CMT is very similar to a bank deposit product.”

Ms Vincent said thousands of self managed superannuation fund advisers, who used CMTs as their cash hub, would now be exempt from the SOA provisions.

For further information, please contact:

Irene O'Brien
Head of PR & Communication
Macquarie Financial Services Group
Macquarie Funds Management Group
Tel: (612) 8232 3241
Mobile: (61) 417 260 309