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What will the role of the trustee look like in the brave new world of the post-GFC financial services sector? A discussion paper commissioned by trustee company Guardian Trust and drafted by law firm Bell Gully is designed to help generate debate within the industry on this important issue.
In commissioning this paper, Guardian Trust has been able to leverage the experience of its parent company, The Trust Company, a leading independent trustee in New Zealand, Australia and Singapore.
Historically, trustee companies have played a role in supervising various investment products; now, in line with the establishment of the Financial Markets Authority (FMA) and new legislation for the regulation of the financial services industry, clarification is being sought on the role of the trustee, overseen by the FMA as governing body.
Bryan Connor, Guardian Trust’s General Manager Corporate Client Services, says, “It’s important to understand that the future role and regime for trustees will need to be acceptable to the FMA. The authority has indicated its support for debate within the industry, and our discussion paper is designed as an exploratory tool to generate and help guide this debate. We hope to emerge with useful recommendations to discuss with the FMA.
“We believe an enhanced regime will entail a much more proactive approach by trustees to the management of investment issues, with the goal being to anticipate, pre-empt and prevent problems. Greater supervisory powers for trustees will be a step-change in the financial services industry, as we see it, and will accord with what the FMA is looking for from us and seeking to do itself.”
Mark Todd, the Bell Gully partner who drafted the discussion paper, says, “The policy response to the GFC and its effects in New Zealand, including the collapse of the finance company sector, was the framework for an enhanced regime for trustees. No one yet knows exactly what that regime looks like or how it will operate over time, and this is what we hope our discussion will help to determine. We expect the FMA will follow the debate closely, and in due course may issue its own guidance for the supervision of managed funds.
The issue of trustee supervisory powers is of primary concern to Guardian Trust, which over the past five years has become the market leader in supervision of KiwiSaver; the company’s corporate client services division now manages 50% of the KiwiSaver programme’s $12 billion under supervision.
Among Guardian Trust’s KiwiSaver clients are some of the largest schemes, including those of the default providers AMP and OnePath, and the schemes operated by ANZ, National Bank, Westpac and Smartshares. Under the Financial Markets Conduct Act, the trustee’s supervisory role in relation to KiwiSaver managers will be rolled out to other investment issues.
Chief Executive Officer of The Trust Company and Guardian Trust, John Atkin, said, “I congratulate the team at Guardian Trust and Belly Gully for partnering on such an initiative that will help shape the future of the industry in New Zealand.”
Topics addressed in the discussion paper are the current legal framework for managed fund supervisors; a consideration of what prudent, professional supervisory practice and manager practice look like; the functions that require supervision; supervision in practice; and the Financial Markets Conduct Act, which is likely to extend and broaden the trustee supervisory model.
Mr Connor addressed these matters in depth at the Workplace Savings NZ 2012 National Conference on 16 and 17 August at the Pullman Hotel in Auckland: http://www.workplacesavings.org.nz/workplace-savings-nz-2012-national-conference/