Superannuation Law cont.
superannuation interest in the entity.
The applicant must be given a
written application form, a ‘key
features statement’ (KFS) and, if
applicable, an investment strategies
document.
The Class Order exempts trustees
from compliance with these paperbased requirements, with immediate
effect. It will allow a person to make
an electronic application for a
superannuation interest in the entity
and will also allow a KFS and an
investment strategies document to be
given electronically, providing
certain conditions are met.
The main condition is that the
trustee must take all reasonable
measures to ensure that if an
electronic application form is issued
to a person, the person is given, at
the same time and by the same
means, access to an electronic KFS
and (if applicable) an electronic
investment strategies document. The
trustee cannot issue a
superannuation interest in response
to an electronic application unless
the trustee is satisfied that this main
condition has been complied with.
The Class Order reflects the
approach that was adopted by ASIC
in October 2000 when it released a
policy proposal paper on electronic
distribution of life insurance and
superannuation products. However
in response to industry comment,
the Class Order is less prescriptive
than the policy proposal paper,
which is good news for trustees.
Although the Class Order relates
to public offer superannuation funds,
it will, in time, have more general
application. This is due to the
Financial Services Reform Bill 2001
and the choice of fund proposal,
both of which will require trustees to
distribute some sort of KFS to
members and to receive application
forms from members.
Conclusion
From 1 July 2001, the ETA will
assist fund trustees and administrators
in relation to member
communications, but only if members
consent (and presuming also that
members have access to electronic
communication channels). The ETA
will also assist funds in their dealings
with the regulators, so long as the
various ETA requirements are met.
Although the ETA’s regime will be
easiest to implement with respect to
the regulators because there is no
need for consent, trustees will no
doubt be particularly interested in
pursuing electronic communications
with members. Obtaining member
consents presents a challenge for
trustees. However, with some
forward planning trustees could
commence seeking those consents
now in readiness for the new regime.
Trustees will also have to be
mindful of the Government’s best
practice model and ASIC’s Class Order
before offering electronic based
services and information to members.
The developments highlighted in
this article indicate that the
‘information age’ is set to have an
increasing impact on superannuation
fund trustees and members. It will be
interesting to monitor the outcomes.
News and Views
Is this offer too good to be true? —
How to spot shonky investment ads
A limited number of land and air space packages are
being sold off to help fund further airport developments.
The land has been zoned industrial and is available in
five acre lots only. Located directly under the flight
path, the air space is currently earning huge fly over fees
and as the Olympic Games draw closer the projected
earnings are set to explode. If you have $50,000 to
invest you must act now. Call AeroState Enterprises for
a contract today on 1300 300 630 for the cost of a local
call. Loan options are available for certain clients.
Would you be taken in by these ads?
In April 1998, these advertisements appeared in
newspapers and magazines across the country. More
than 700 people phoned for more information about
investing. The ads were part of an April Fool’s Day
campaign by the Australian Securities and
Investments Commission (ASIC) to warn people
about dodgy investment schemes. If the ads had been
for real, prospective investors would have risked their
savings based on the glowing, but false promises in
these advertisements.
Until recently Bluebottles were something to be avoided.
But thanks to breakthrough medical research, the
poisons that cause stinging and respiratory problems are
now being used in a whole range of medicinal products.
Extensive testing has been done and this new Bluebottlebased medicine will be available to the public in the year
2000. The next two years will see huge growth in
Bluebottle farming and the projected profits are
phenomenal. If you’re prepared to invest now you can
minimise your tax and earn a guaranteed 50% return.
Contact BluePharm for the cost of a local call on
1300 300 630.
continued on page 372
JULY 2001
KEEPING GOOD COMPANIES
361
New consumer protection in electronic banking cont.
application of the principles to EFT
transactions.
Electronic
communications
Part C of the expanded Code
permits users and Code subscribers to
agree that Code subscribers can
provide by electronic means any
information (including changes to
terms and conditions and charges) to
a user’s nominated electronic device
or address or by making it available
at the Code subscriber’s electronic
address for retrieval. The user’s
agreement must be informed and be
by a specific positive act (eg clicking
‘I Agree’) after receiving an
explanation of the implications of
such an act. Users may vary their
electronic device or address or
terminate the agreement by notice to
the Code subscriber.
Provisions are made for dealing
with overlapping requirements for
disclosure under the Code and
legislation, for example, the
Financial Services Reform Bill 2001.
ASIC will have certain powers to
modify the application of some
provisions of the Code in relation to
Code subscribers or prospective Code
subscribers after a process of
consultation with relevant
stakeholders, including user
representatives.
Conclusion
schemes (also known as pooled or
collective investment schemes). A
group of investors puts their money
together under one ‘manager’ for a
greater return on their investment.
Managed investments schemes
often rely on the promoter’s efforts
for a profit. Most but not all risky
investments are offered as managed
investments schemes (but that is not
to say that all managed investment
schemes are high risk!).
Managed investments schemes
include:
• property trusts
• equity (share) trusts
• cash management trusts
• agricultural investment schemes
(for example, pine trees, olives,
flowers or fish farming).
personal offer’, raising under $2
million, the person does not have to
lodge a disclosure document with
ASIC. However, they must not
advertise the offer or publish
statements about the offer.
The new EFT Code represents a
substantial expansion of the old EFT
Code and should provide world-best
practice protection for consumers in
a technology-neutral form for a wide
variety of EFT and stored value
products.
The close involvement of industry
and user representatives in the
drafting of the Code is likely to
ensure a high degree of adoption by
financial institutions and other
organisations as a way of enhancing
customer confidence in the wide
array of new payments technologies
that are being offered, and will be
offered, to consumers.
continued from page 361
How to recognise potentially
misleading ads for investment
schemes
If you are tempted by an
investment offer advertised in a
magazine or paper, ask yourself four
questions:
• Does it refer to a prospectus
lodged with ASIC?
• Do the returns on the investment
look too good to be true?
• Is the contact address overseas?
• Is the Australian address only a
post office box or an email
address?
If an advertisement seems
unreasonably optimistic, ask the
promoter if the substance of the ad is
in the prospectus. A promoter must
not make claims in an ad which are
not in the prospectus.
As a rule of thumb the higher the
return, the higher the risk to the
investor. Advertisements may not
always adequately convey this risk
and may misrepresent the actual
prospects of the investment.
What sort of investments are
we talking about?
Misleading advertisements can
involve managed investment
372
JULY 2001
What does the law say about
promoting investments?
A person offering securities to the
general investing public must lodge a
disclosure document (for example, a
prospectus) with ASIC, which
informs prospective investors about
the features and risks of the
investment. After the disclosure
document is lodged, any
advertisements about the offer must
refer people to this document.
If an offer is a ‘small scale
KEEPING GOOD COMPANIES
Why is there concern about
shonky investment
advertising?
Unfortunately, in the past few
years investors have lost millions of
dollars in illegal investment schemes.
Consumers need to be educated
about what to look out for when
shopping around for financial
products and services.
How you can help?
By being aware of potentially
misleading or deceptive ads, as a
consumer you can help raise the
general quality of advertising for
investments.
If you believe an advertisement is
potentially misleading, contact the
newspaper or magazine with your
concerns. Publishers are liable under
s 734 of the Corporations Law if they
publish advertisements about offers
of securities which they know or
suspect may be misleading or
deceptive.