“Too many” funds:industry seeks help

Australia has “too many” investment funds, according to an industry leader, who wants the new Rudd Labor government to  make fund amalgamations easier.

Richard Gilbert, the chief executive officer of the Investment and Financial Services Association, made the appeal at an industry breakfast today

He also offered the Federal government a little assistance, that it might, one day, welcome.

“For a number of reasons, our industry has an excess of financial products,” Mr Gilbert said.

“For example, I am aware of one company that has 1,000 financial products.”

Mr Gilbert said these had  been accumulated not only through mergers and acquisitions, but as a result of changing legislation, as well.

“They say they could work well with, perhaps, just 15 products,” Mr Gilbert added.

He said IFSA is working hard, trying to persuade the government to make legislative changes, that would make product rationalisation easier.

However, he said that had to be done in ways that would not be to the detriment of the remaining investors in a legacy fund.

The present situation, though, is harming investors, already.

Mr Gilbert told of a member company that has a single investor, in a fund it cannot shut down.

“The (cost of the) management, administration and compliance to keep this fund running must be in the order of more than $130,000 a year,” Mr Gilbert said.

Guess who will, ultimately, pay those bills?  That’s right, the investors who play such a critical part in the operation of the Australian economy.

And the help?

Mr Gilbert was also kind enough to point the new Treasurer, Wayne Swan, towards what he called “a proven means” of returning “fiscal surpluses” to taxpayers, without igniting inflation.

“Superannuation incentives are a proven means of transferring public wealth into private hands, but with only minimal inflation and interests rates,” he said.

“The IFSA pre-budget submission will canvass this matter strongly,” Mr Gilbert added.

Your author, a veteran press gallery journalist, would advise Mr Gilbert to speak very slowly and clearly, when he explains this to Mr Swan.  Labor still has very painful memories of the fuss John Howard made, many years ago, when Paul Keating did something like that, with the second tranche of his famous L.A.W. law tax cuts.

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