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Speaker 1: Hello and welcome to the Australians Money Puzzle podcast. I'm

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Speaker 1: James Kirby. Welcome aboard everybody. Am I imagining this or

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Speaker 1: is there suddenly again a lot of bad behavior, bad

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Speaker 1: actors as they call them, sweeping through the investment markets,

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Speaker 1: not just share markets, but property markets as well. We

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Speaker 1: mentioned on the show just on Tuesday we had Sam

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Speaker 1: Price and he was telling this extraordinary story about how

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Speaker 1: influencers social media financial I don't want to say the

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Speaker 1: word advisors, but financial operators who assume the mantle of

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Speaker 1: advisors on social media had been luring investors into single

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Speaker 1: districts basically within certain cities Brisbane and Melbourne, and of

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Speaker 1: what Sam described as pump and dumb, basically that they

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Speaker 1: lie them all into the one suburbs, the suburb goes up,

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Speaker 1: and then of course it's all over and reality hits

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Speaker 1: and these suburbs don't actually turn out to be good investments.

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Speaker 1: I had always thought of influencers and advice issues around

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Speaker 1: share market, but it can be property as well. We

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Speaker 1: also have, of course, the emerging scandal ever growing scandal

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Speaker 1: around the trust Gargent Group and issues around SMSF commencements.

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Speaker 1: We're big SMSF fans on the show, but we always

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Speaker 1: say they're not suitable for everybody. My guest today is

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Speaker 1: someone who's right across all this. He is not only

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Speaker 1: across it, but he has the power i'd like to

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Speaker 1: think sometimes at least to change what's going on. It's

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Speaker 1: Alan Kirkland, and he is the ACIC Commissioner with particular

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Speaker 1: oversight on consumer affairs. How are you Allen?

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Speaker 2: Excellent, James, Really great to be here with you today.

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Speaker 1: Very nice to have you on the show, and good

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Speaker 1: to have someone like you on the show. As I've

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Speaker 1: mentioned to you earlier, we offer mention money smart as

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Speaker 1: a place to start for investors and to get a

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Speaker 1: grips on the basics. Our listeners probably would think that

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Speaker 1: they're sort of step up from that level, but often

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Speaker 1: that's for dangerized as you'll probably tell us pretty soon.

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Speaker 1: Just quickly on that, just on that first point I

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Speaker 1: was talking about, and I know, folks, the reason Alan

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Speaker 1: is on the show is he wants to tell us

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Speaker 1: a few things about what's going on at ACIC and

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Speaker 1: what they're doing and some of the areas that they

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Speaker 1: want to warn us about. But on that whole thing

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Speaker 1: about finfluencers. It seems like it never goes away. Is

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Speaker 1: how do you guys actually move in on that. It

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Speaker 1: seems like a perennial problem. This is an old problem

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Speaker 1: dressed up in a new fashion on social media.

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Speaker 3: I think, oh, it is a key concern for us.

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Speaker 3: I mean we, of course, I only have the power

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Speaker 3: to interven if they're actually if people are actually giving

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Speaker 3: advice in relation to financial products or services. So there

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Speaker 3: are lots of forms of property investment that don't fall

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Speaker 3: into that category. Can't necessarily take action if people are

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Speaker 3: giving advice about property investment, but with what they're doing

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Speaker 3: is recommending that people invest in a financial product or service,

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Speaker 3: then it's quite likely that they're providing financial advice and

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Speaker 3: that requires a license.

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Speaker 2: And we've been really active against influencers.

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Speaker 3: Earlier this year we took action coordinated action with a

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Speaker 3: range of regulators around the world as part of a

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Speaker 3: global week of action against influencers that involved search warrants

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Speaker 3: and arrests and some other jurisdictions. In Australia, we identified

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Speaker 3: a range of influencers who we felt were giving financial

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Speaker 3: advice and we've reached out to them and thus the

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Speaker 3: second time we've done that, and we have actually seen

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Speaker 3: a number of them changed their practices after being contacted

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Speaker 3: by ACIC because I think for them it came as

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Speaker 3: a I hope it came as a bit of a

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Speaker 3: shock and really made them think about the fact they

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Speaker 3: might be breaching the law. So we'll have a bit

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Speaker 3: more to say about that, I think earlier in the

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Speaker 3: new year, because we're just sort of wrapping up that

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Speaker 3: latest round of action. But I can assure your listeners

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Speaker 3: that it's a key concern for us because to give

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Speaker 3: financial advice in Australia you need to be appropriately qualified,

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Speaker 3: and you need to have a license or be authorized

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Speaker 3: by a licensee, and we will take action where we

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Speaker 3: find people who aren't complying with those requirements.

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Speaker 1: Oh the sure we make a socially when we have

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Speaker 1: a question and answer session, I make it very clear

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Speaker 1: that it's not advice. I say this all the time,

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Speaker 1: it's information. But how does the average intelligent, every day

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Speaker 1: investor de called what's advice and what isn't advice? And

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Speaker 1: has it become more difficult with now media or social media?

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Speaker 3: Actually, the test in the law around what's financial advice

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Speaker 3: is pretty simple.

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Speaker 2: When you strip it back.

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Speaker 3: It really comes down to whether somebody is making a

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Speaker 3: recommendation about a particular financial product. So if somebody is

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Speaker 3: suggesting that you invest in something, that's effectively advised, so

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Speaker 3: you should always have it your I guess your senses up.

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Speaker 3: If somebody's talking up a particular investment option, and if

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Speaker 3: they're encouraging you to invest in it, you should be

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Speaker 3: checking out whether they've actually got a license or whether

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Speaker 3: they're somehow authorized by an existing licensee. And that's important

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Speaker 3: because if you get financial advice from somebody who's appropriately licensed,

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Speaker 3: there are important consumer protections that come with that. So

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Speaker 3: they've got to be a member of Africa the Dispute

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Speaker 3: Resolution Body, they've got to have appropriate arrangements for dealing

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Speaker 3: with complaints you make to them and for providing compensation

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Speaker 3: if something goes wrong. So you do get some important

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Speaker 3: protections by engaging with somebody who's appropriately licensed. So you

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Speaker 3: should always ask that question if they're suggesting you make

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Speaker 3: an investment. Obviously there are some exemptions for genuine media

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Speaker 3: organizations or which I think is part of what you

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Speaker 3: were referring to in those earlier comments, James, but outside

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Speaker 3: programs like this, if somebody on social media or somewhere

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Speaker 3: else is telling you to invest.

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Speaker 2: You should always be.

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Speaker 1: Wary and how would I check? So somebody's quite convincing,

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Speaker 1: how would I actually check that they are licensed?

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Speaker 3: Yeah, so there is a register that we published. We've

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Speaker 3: got registers of licensees and particularly of financial advisors who

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Speaker 3: are authorized to give financial advice. And the easiest way

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Speaker 3: into them is in fact via the money smart website

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Speaker 3: that you mentioned. So if you go to money smart

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Speaker 3: dot gov dot au look at the financial advice section,

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Speaker 3: you'll be able to find access to the register there

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Speaker 3: and you can enter the name of an individual and

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Speaker 3: you'll be able to find out whether they're authorized to

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Speaker 3: give financial advice.

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Speaker 1: Okay, Now, a lot of our listeners maybe is very

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Speaker 1: roughly coming up on half of them have an SMSA

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Speaker 1: for self managed super fund or aspire to have one.

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Speaker 1: And there is issues again yet again, and something of

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Speaker 1: a flashpoint, I suppose in this area in the first

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Speaker 1: guaragean scandal which is emerging just now where there's many

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Speaker 1: investors caught with their super in scheme, shall we see,

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Speaker 1: which is it's unfolding as we speak. But what's really

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Speaker 1: surprising is there's an estimated billionaire, so that could be

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Speaker 1: lost here. And it's got a lot of big names

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Speaker 1: in it, right, So a lot of big names were

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Speaker 1: in one way or another entangled in this and people

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Speaker 1: were very poorly advised. But what strikes me Alan is

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Speaker 1: is that it seems that's at the heart of the

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Speaker 1: financial system. Is there what can you do to protect

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Speaker 1: people from getting losing money or risking losing money when

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Speaker 1: an affair emerges where it ostensibly looks feasible or reasonable

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Speaker 1: because well known household names are mentioned in passing by

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Speaker 1: these operators.

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Speaker 3: It is one of the questions that is probably our

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Speaker 3: biggest priority in ethic at the moment, I mean across

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Speaker 3: the Shield and First Guardian Color, which had some really

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Speaker 3: similar elements. I mean, we've got a whole bunch of

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Speaker 3: investigations underway. We've already launched a range of litigation. We've

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Speaker 3: i think been in court around forty five times in

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Speaker 3: the past year or so, and we've got about forty

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Speaker 3: people working on these. So it's one of our biggest

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Speaker 3: priorities as a regulator, and one of the ways that

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Speaker 3: one of the key things we've done is an immediate

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Speaker 3: priority is to try and protect investor funds. So when

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Speaker 3: we were alerted to the fact that there might have

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Speaker 3: been I guess some inappropriate behavior going on in the

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Speaker 3: management of those funds that people invested in by their

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Speaker 3: super one of the first things we did once we

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Speaker 3: had sufficient evidence was to go to court to get

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Speaker 3: asset freezing orders to stop any more money disappearing. We

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Speaker 3: eventually got receivers and liquid ators appointed who can secure

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Speaker 3: whatever assets are there and try to make sure they're

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Speaker 3: appropriately distributed, and ideally there's many of those funds as

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Speaker 3: possible to go back to investors, so that's an important

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Speaker 3: part of it. One of the challenges is sometimes these

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Speaker 3: things come to our attention a bit too late for

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Speaker 3: us to save all of the assets, so we're still

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Speaker 3: working through the process to see how much can go

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Speaker 3: back in relation to investors in those two schemes. But

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Speaker 3: the other thing we've done is to try and find

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Speaker 3: other methods to get compensation for investors, So, particularly in

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Speaker 3: relation to the shield Master Fund, which is the other

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Speaker 3: one I mentioned, we did get an important agreement recently

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Speaker 3: from mcquarie, which is one of the big names I

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Speaker 3: assume you're referring to. It is that they will make

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Speaker 3: things right for the people who invested via the McQuary

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Speaker 3: platform in the Shield master funds. So for those investors

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Speaker 3: who did so via McQuary, they will be receiving effectively

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Speaker 3: well kind of refunds. All that there will be payments

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Speaker 3: made back into their super too make up for the

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Speaker 3: loss of the veil of their original investment. So that's

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Speaker 3: an important action that we pursued because this is people

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Speaker 3: super and we know that it's very distressing for people

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Speaker 3: who've based losing it.

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Speaker 1: The Mcquarie payment promises such as three hundred million or so,

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Speaker 1: and it would appear to be a very good development

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Speaker 1: and it appears to be voluntary as such. Are you

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Speaker 1: hopeful that other key players will follow in their footsteps?

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Speaker 2: We would like to see them do. So.

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Speaker 3: There's one other superannuation trustee that we've taken action against

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Speaker 3: in relation to Shield at this stage, and that is

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Speaker 3: Equity Trustees, the superannuation entity run by Equity Trustees, and

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Speaker 3: in that case we are seeking court orders that they

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Speaker 3: provide remediation to the customers affected. So I'll have to

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Speaker 3: see how that works through the courts, but it demonstrates

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Speaker 3: that's one of the key things we're pursuing and then

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Speaker 3: in the bigger picture, James, we want to do everything

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Speaker 3: we can to stop this happening again, and that involves includes,

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Speaker 3: I guess holding the individuals and the entities to account.

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Speaker 3: So I mentioned we've started litigation against those two super trustees.

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Speaker 3: We've taken started action against several advice firms. We've started

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Speaker 3: action against one of the lead generation firms and a

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Speaker 3: research us that gave positive ratings to the shield Master Fund,

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Speaker 3: as well as already taking a ministry of action to

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Speaker 3: ban a number of advisors. So all of that is

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Speaker 3: part of the bigger picture in terms of trying to

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Speaker 3: stop this sort of thing happening again, by with the

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Speaker 3: bannings taking some people out of the industry who in

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Speaker 3: our view of caused harm, and with the other action,

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Speaker 3: trying to send a really powerful message to others that

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Speaker 3: might be considering engaging in this sort of conduct that

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Speaker 3: there are consequences and they can be really serious.

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Speaker 1: I don't want to be fatalistic, but it strikes me

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Speaker 1: that no matter how hard you try as a regular leader,

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Speaker 1: it's a conversion of this one born every minute, right,

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Speaker 1: it never stops. There is always people who will infiltrate

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Speaker 1: the system and not act appropriately, and that way, the

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Speaker 1: conventional systems can never stop that until it's revealed. Do

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Speaker 1: you think you have a reasonable that this is a

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Speaker 1: landmark case that may change things or not.

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Speaker 3: I think this has the potential to change things by

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Speaker 3: if we're successful in our litigation. And on top of

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Speaker 3: the litigation I've already mentioned, we've got the option if

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Speaker 3: we think it's appropriate to refer some matters to the

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Speaker 3: Director of Public Prosecutions to consider criminal action. We're not

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Speaker 3: there yet, but if that were to happen, that's an

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Speaker 3: even stronger message to people about the consequences of engaging

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Speaker 3: in this sort of conduct. And then the other part

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Speaker 3: of it is, we do think there is a question

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Speaker 3: about whether there are some regulatory gaps, like whether the

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Speaker 3: law could actually be tightened in a key few areas

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Speaker 3: to better protect people. And I think as we work

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Speaker 3: through everything we've seen and complete these investigations our thinking

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Speaker 3: we'll get clearer on that. And the Assistant Treasurer has

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Speaker 3: said the government is very much looking at that issue

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Speaker 3: of whether there could be some law reforms to better

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Speaker 3: protect people in the future from this sort of harm.

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Speaker 1: Okay, very good, and very good to get your view

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Speaker 1: on that issue, which, of course, as I say, is

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Speaker 1: unfolding still before our eyes. Now, folks, there is some

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Speaker 1: very interesting developments happening at ACID which I think would

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Speaker 1: be very good for you to hear about. We're going

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Speaker 1: to catch up with that in a moment with Alan.

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Speaker 1: Talk to you soon. Hello, Welcome back to The Australian's

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Speaker 1: Money Puzzle podcast. James Kirby here with Alan Kirkland ACCIK

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Speaker 1: commissioner and the commissioner certainly, I think for many people

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Speaker 1: with the most interesting part in ACCIC, which is in

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Speaker 1: the consumer area, which is immense of course, and most

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Speaker 1: of the stories that you read we'll come across his

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Speaker 1: desk sooner or later because he's the police. Now. I

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Speaker 1: mentioned at the start that we often mentioned money Smart,

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Speaker 1: the website which is a very good resource, a free resource,

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Speaker 1: a government resource, and to that extent, has exceptionally in

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Speaker 1: the tendance and that is that's in your realm, and

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Speaker 1: you've done a study of who's been using it, and

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Speaker 1: you've discovered a few things, What did you find out.

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Speaker 2: We've done a really big piece of research here.

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Speaker 3: I mean there's been a range of quality of research

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Speaker 3: talking to people in focus groups. We also did a

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Speaker 3: really large survey with around three thousand respondents, which is

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Speaker 3: a pretty big sample for that sort of research. I

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Speaker 3: guess some of the high levels of findings that stood

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Speaker 3: out to us were that only about a quarter of

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Speaker 3: Australians over eighteen consider themselves to be very knowledgeable in

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Speaker 3: relation to financial matters, and I guess on the flip side,

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Speaker 3: around three quarters would actually like to be more knowledgeable.

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Speaker 3: So that says two key things to me. One is

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Speaker 3: there is a big gap that we can help to

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Speaker 3: bridge in terms of helping be able to understand financial

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Speaker 3: products and services and how to negotiate the system. But

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Speaker 3: also that people are really open to that, like that

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Speaker 3: there is a thirst to know more, and so that

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Speaker 3: just says there's a big opportunity for money smart. We're

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Speaker 3: already feeling that in many ways, but there's a big

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Speaker 3: opportunity for us to do a lot more to help

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Speaker 3: Australians who both need and want that sort of help.

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Speaker 1: I imagine part of this is due to the fact

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Speaker 1: that and we have this is measured and it is audited,

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Speaker 1: and it is beyond doubt that Australia was better and

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Speaker 1: more more financially literate ten years ago and we have

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Speaker 1: actually dropped through the OECD tables and we seem to

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Speaker 1: be it's almost stagnant really. In the UK this month

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Speaker 1: they introduced financial literacy as a mandatory subject. Do you

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Speaker 1: think that to that extent those issues are reflected in

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Speaker 1: what you're service showed?

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Speaker 2: Look, it's a bit hard to say, really, I think it.

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Speaker 2: I said.

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Speaker 3: Our reflection has been that Money Smart in some senses

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Speaker 3: has been a bit of a victim of its own

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Speaker 3: success in that it has been really effective I guess,

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Speaker 3: attracting the attention of lots of Australia. It has over

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Speaker 3: eleven point seven million visitors per year.

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Speaker 2: That's a lot.

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Speaker 3: We probably haven't really been thinking on an ongoing basis

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Speaker 3: about how do we just constantly improve and make sure

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Speaker 3: we're addressing the right topics that people are thinking about,

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Speaker 3: that we're talking about them in ways that resonate with

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Speaker 3: the different groups of consumers that are thinking about those topics,

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Speaker 3: and also going to consumers where they are, whether that's

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Speaker 3: you know, on social media, talking to people like I'm

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Speaker 3: doing with your listeners today. So I think for us

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Speaker 3: as a reflection, we actually need to be investing a

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Speaker 3: lot more in keeping money Smart fresh and just constantly evolving.

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Speaker 1: That you mentioned you've found some particular revelations as such

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Speaker 1: an on the pre retiree area, Can you tell us

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Speaker 1: a little about that. What did you find out? What

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Speaker 1: do our listeners need to know?

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Speaker 3: Yeah, that's a big focus for us, So I think

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Speaker 3: your listeners will hopefully start to see a lot more,

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Speaker 3: including some advertising in media to really try and lift

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Speaker 3: the awareness of money Smart as a place you can

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Speaker 3: go in if you're approaching retirement or in retirement. So

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Speaker 3: we're planning on doing a lot more in that area.

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Speaker 3: But I think one of the key things that we

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Speaker 3: got from the research about pre retirees was some real

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Speaker 3: clarity around the key questions that are on their mind.

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Speaker 2: So I yes, what are they all of Across all.

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Speaker 3: The groups that we research there, we are five key

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Speaker 3: things that came up. They were how much will I

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Speaker 3: need to retire? Will I have enough? How do I

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Speaker 3: make it last? Am I on the right track? And

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Speaker 3: what can I do to improve now? They're all really

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Speaker 3: kind of sensible questions, but there are also questions that

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Speaker 3: we can really provide practical help with both in terms

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Speaker 3: of I guess information we can publish to help people

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Speaker 3: to understand some of the key issues and products available,

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Speaker 3: but also things like tools and calculators, which have always

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Speaker 3: been at the heart of money smart as well. So

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Speaker 3: it's not just sort of, you know, publishing web pages

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Speaker 3: where people can read stuff. It's also always been about

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Speaker 3: giving people tools that they can play with and help

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Speaker 3: to understand how it applies to them.

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Speaker 1: I guess this question every week, everydear year. How much

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Speaker 1: should I have in super? And I don't want to

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Speaker 1: be facetious about it, but I see as much as

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Speaker 1: you possibly can, there's a lot of estimates around. I

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Speaker 1: don't know how you guys dealt with this, but I

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Speaker 1: could show you a spectrum of estimates of what people

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Speaker 1: see that the average Australian or the everyday Australian investors

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Speaker 1: should have in super to have a comfortable retirement or whatever.

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Speaker 1: And there's a big spectrum. Why is there a big spectrum?

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Speaker 1: And are some people on that spectrum not being honest?

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Speaker 3: I think it's a really interesting question. I mean, some

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Speaker 3: of those estimates come from bodies in the superannuation industry.

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Speaker 3: There are others that come from I guess, groups outside

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Speaker 3: the industry such as superannuation consumers Australia, and we draw

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Speaker 3: on a range of them in our tools and really

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Speaker 3: at Money Smart because we are independent, we don't have

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Speaker 3: an agenda, so we're not trying to say we don't

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Speaker 3: go into helping people saying this is what's right for you.

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Speaker 3: What we're trying to do is put the power into

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Speaker 3: individual consumers and investors' hands, so to help them to

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Speaker 3: understand the issue, give them tools, and the tool might

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Speaker 3: sort of itself give a range of options, but it

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Speaker 3: helps people to understand, you know, the implications of each

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Speaker 3: option and to match it to their circumstances so they

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Speaker 3: can work out what's the right answer for them and

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Speaker 3: what they want to be aiming to have upon retirement,

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Speaker 3: and then move on to think, well, how do I

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Speaker 3: actually get there? What decisions can I make now that

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Speaker 3: will put me in a better position.

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Speaker 2: When I read retirement age.

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Speaker 1: The biggest single criticism I have of all those, and

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Speaker 1: I only sort of figured it out in recent times,

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Speaker 1: is that in general they do an actual areial assumption

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Speaker 1: of some description and they say, okay, you're going to

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Speaker 1: retire with sixty five and you've got X, and this

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Speaker 1: is how you have this is how we're to work.

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Speaker 1: But they assume that at a certain point that these

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Speaker 1: assumptions about how much you'll have each year at the

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Speaker 1: calculators they tell you they assume it runs down to zero,

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Speaker 1: and then you flip over to the pension when you

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Speaker 1: are how will I describe this politely advanced old age

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Speaker 1: on thirty grand a year or whatever it will be

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Speaker 1: by then do you think that's is that the way

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Speaker 1: you guys do it or is that the best way

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Speaker 1: to do it?

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Speaker 3: I think it really depends on someone's individual circumstances, and

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Speaker 3: we're trying to help people to understand that. So the

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Speaker 3: answer is very different depending on what sort of income

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Speaker 3: you've been on as you approach to retirement, and what

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Speaker 3: sort of lifestyle you're accustomed to and you expect to maintain.

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Speaker 3: Makes a big difference. What your housing situation is, so do.

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Speaker 2: You own your own home or not? It's probably one

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Speaker 2: of the biggest factors.

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Speaker 3: And also, you know, are there any other sort of

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Speaker 3: particularly important types of expenditure that you're going to have

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Speaker 3: to face in retirement. So we try to help people

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Speaker 3: to work through some of those factors and work out

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Speaker 3: what's right for them, and for some people indeed planning

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Speaker 3: to spend some of retirement on the pension, maybe the

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Speaker 3: right decision, But for lots of people that it's not

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Speaker 3: going to be reality, to be honest, because in fact,

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Speaker 3: the other thing we know is for people with significant

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Speaker 3: superbalances on the whole, they tend not to use all

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Speaker 3: of their super in retirement. Many people die with still

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Speaker 3: money left in their super. So the idea that if

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Speaker 3: you've got a decent balance, you're going to get down

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Speaker 3: to the level where you'd be eligible for a significant

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Speaker 3: pension isn't a reality for lots of people based on

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Speaker 3: how they use their super now.

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Speaker 1: Based on what we know about how much they need behind. Okay,

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Speaker 1: just one last thing on that issue, we'd go to

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Speaker 1: a break. The estimates about how much you should have

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Speaker 1: in super. Are they, in your opinion, generally too high

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Speaker 1: or too low?

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Speaker 2: Look, I think there's a range, I would say, question.

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Speaker 3: I think some of them are too high for some

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Speaker 3: people's individual circumstances and the reality of what we know,

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Speaker 3: because the other thing about we know about retirement is,

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Speaker 3: in general, depending on the answer to that housing question,

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Speaker 3: lots of people actually spend less in retirement there's a

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Speaker 3: lot of expenditure that you incur when you're in of

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Speaker 3: working age that just falls away once you retire. And

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Speaker 3: I think that some of the calculators don't adequately or

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Speaker 3: some of the assumptions don't adequately factor that in, so.

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Speaker 2: Some of them do come up with relatively high figures.

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Speaker 2: And I guess that worries.

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Speaker 3: If that worries is if it makes people unnecessarily distressed

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Speaker 3: around their current superbalance, which is why we're really trying

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Speaker 3: to give people tools that they can trust to help

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Speaker 3: them work out what's an appropriate figure for them.

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Speaker 1: Okay, very good, All right now, folks, we're going to

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Speaker 1: tackle out on a random bunch of questions which I

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Speaker 1: think you'll find very interesting. In the last segment back

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Speaker 1: in a moment, Hello, Welcome back to The Australian's Money

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Speaker 1: Puzzled podcast. James Kirby here with Alan Kirkland, the AC commissioner. Now, Alan,

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Speaker 1: no rhyme or reason to these questions. They are random,

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Speaker 1: but I think our listeners will find them find them

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Speaker 1: very appropriate. And folks, I didn't actually take questions from

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Speaker 1: the audience. These are my own questions. Normally this part

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Speaker 1: of the show and their listener questions. But this is

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Speaker 1: someone I've been looking and reading over over recent times. Crypto.

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Speaker 1: I imagine crypto is something that you're alert to. The

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Speaker 1: great breakthrough for the sort of listeners that I have

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Speaker 1: on the show. We've always been a debate about crypto,

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Speaker 1: but many listeners were greatly reassured by the arrival of

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Speaker 1: exchange traded fans ETFs for crypto for the simple reason

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Speaker 1: that you no longer had to explain to your auditor

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Speaker 1: if you had an SMS if that you know, you

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Speaker 1: were dealing with some exchange they never heard of. They

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Speaker 1: don't ask any questions. Basically, it's an ETF file. If

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Speaker 1: you had crypto, they would be asking all sorts of questions.

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Speaker 1: From a regulatory point of view, the institutionalization wing of crypto,

439
00:23:50,080 --> 00:23:51,800
Speaker 1: has it made it easier for you?

440
00:23:54,200 --> 00:23:56,320
Speaker 3: It's a really good question. I mean, it gives us

441
00:23:56,320 --> 00:23:59,200
Speaker 3: some clarity. So if I talk about the non ATF

442
00:23:59,240 --> 00:24:03,600
Speaker 3: world of crypto, when we're applying the law, we're applying

443
00:24:03,760 --> 00:24:04,280
Speaker 3: the law.

444
00:24:04,119 --> 00:24:05,400
Speaker 2: That's been in place for decades.

445
00:24:05,440 --> 00:24:07,480
Speaker 3: It says what's a financial product and what isn't in

446
00:24:07,560 --> 00:24:10,720
Speaker 3: Australia and what that means in reality is some crypto

447
00:24:10,920 --> 00:24:14,399
Speaker 3: type products are financial products, some are not, and to

448
00:24:14,400 --> 00:24:17,040
Speaker 3: some extent we're still working through that question as we

449
00:24:17,680 --> 00:24:20,680
Speaker 3: take selective court action and we've got one that's before

450
00:24:20,680 --> 00:24:22,679
Speaker 3: the High Court at the moment to really get the

451
00:24:22,720 --> 00:24:26,439
Speaker 3: courts to help us to clarify how those long standing

452
00:24:26,480 --> 00:24:29,760
Speaker 3: definitions apply to crypto. So there's in some areas of

453
00:24:29,760 --> 00:24:32,639
Speaker 3: crypto less clarity what the ETFs do. I mean, the

454
00:24:32,640 --> 00:24:36,040
Speaker 3: ETFs themselves are very clearly financial products that we regulate,

455
00:24:36,320 --> 00:24:40,280
Speaker 3: so that just falls really clearly within the existing framework

456
00:24:40,320 --> 00:24:44,600
Speaker 3: for managed investment schemes and we apply our usual approach

457
00:24:44,640 --> 00:24:45,959
Speaker 3: to regulation to those.

458
00:24:47,160 --> 00:24:49,480
Speaker 1: The listener can know that they are squarely in your camp.

459
00:24:49,520 --> 00:24:52,159
Speaker 1: Then if they have chess and crypto, crypto from some

460
00:24:52,400 --> 00:24:53,640
Speaker 1: exchange may not be is.

461
00:24:53,600 --> 00:24:56,960
Speaker 2: That it, Yeah, yeah, that's right, that's right.

462
00:24:56,960 --> 00:24:59,840
Speaker 3: Although they're actually just this week some reforms introduced to

463
00:25:00,040 --> 00:25:03,560
Speaker 3: Parliament that will regulate digital asset platforms, so many of

464
00:25:03,600 --> 00:25:07,120
Speaker 3: those exchanges will then if those laws go through, need

465
00:25:07,160 --> 00:25:09,800
Speaker 3: to have a license with the ASSE, so they will

466
00:25:09,840 --> 00:25:13,120
Speaker 3: be drawn into the regime. But still the underlying crypto

467
00:25:13,280 --> 00:25:16,880
Speaker 3: assets on those platforms may or may not be financial products,

468
00:25:16,960 --> 00:25:19,880
Speaker 3: and that sort of way in which the current law

469
00:25:19,920 --> 00:25:23,000
Speaker 3: applies will still be the case in relation to the assets,

470
00:25:23,000 --> 00:25:24,800
Speaker 3: and maybe trade it on those platforms.

471
00:25:25,800 --> 00:25:28,399
Speaker 1: Can I ask you a private credit It's funny, you know,

472
00:25:28,520 --> 00:25:31,280
Speaker 1: I've had a financial advisor on the show maybe three

473
00:25:31,280 --> 00:25:34,359
Speaker 1: weeks ago who literally said there is no place for

474
00:25:34,440 --> 00:25:38,199
Speaker 1: the private investor in private credit. Extreme view, but you

475
00:25:38,240 --> 00:25:40,960
Speaker 1: could see why they were saying that. I had a

476
00:25:40,960 --> 00:25:45,600
Speaker 1: financial advisor last week on the show very supportive of

477
00:25:45,680 --> 00:25:48,760
Speaker 1: private credit, explaining why it's good for the retail investor,

478
00:25:49,000 --> 00:25:52,679
Speaker 1: explaining why this notional democratization of private credit is a

479
00:25:52,680 --> 00:25:55,719
Speaker 1: good thing. He did, of course, say as long as

480
00:25:55,760 --> 00:25:58,080
Speaker 1: its top tier, first class and you're guided by the

481
00:25:58,119 --> 00:26:02,080
Speaker 1: best advisors. I think have just one major effort on

482
00:26:02,160 --> 00:26:04,439
Speaker 1: private credit. We can't go into too deeply. But what

483
00:26:04,920 --> 00:26:07,359
Speaker 1: to the people who don't know anything about it and

484
00:26:07,400 --> 00:26:09,720
Speaker 1: it's put in front of them, What would you need

485
00:26:09,760 --> 00:26:12,520
Speaker 1: to tell them.

486
00:26:12,040 --> 00:26:13,640
Speaker 2: I would say, ask lots of questions.

487
00:26:13,680 --> 00:26:16,000
Speaker 3: I mean, we've just done a surveillance of over twenty

488
00:26:16,160 --> 00:26:18,440
Speaker 3: private credit funds where some of them retail, some of

489
00:26:18,480 --> 00:26:20,080
Speaker 3: them wholesome, where we went in and had a deep

490
00:26:20,080 --> 00:26:22,679
Speaker 3: look at their practices and just a few examples of

491
00:26:22,720 --> 00:26:25,720
Speaker 3: the issues that we found were some real gaps in

492
00:26:25,800 --> 00:26:29,320
Speaker 3: transparency around what they are really, who they were lending to,

493
00:26:29,720 --> 00:26:32,919
Speaker 3: and what the levels of risk were. Lack of transparency

494
00:26:33,240 --> 00:26:36,520
Speaker 3: around the fees that were being paid and where that's

495
00:26:36,560 --> 00:26:39,240
Speaker 3: important was it kind of masked the level of risk.

496
00:26:39,400 --> 00:26:42,080
Speaker 3: So if they're telling you what the interest rate is,

497
00:26:42,400 --> 00:26:44,679
Speaker 3: you can form a view or how that compares to

498
00:26:44,720 --> 00:26:46,800
Speaker 3: other interest rates, what that means about risk. But if

499
00:26:46,800 --> 00:26:50,159
Speaker 3: they're then charging the borrower a whole bunch of extra

500
00:26:50,240 --> 00:26:53,800
Speaker 3: fees they're not telling the investor about that actually signals

501
00:26:53,800 --> 00:26:55,520
Speaker 3: the risk is probably higher than what you think.

502
00:26:55,760 --> 00:26:57,200
Speaker 2: So a range of.

503
00:26:57,119 --> 00:27:00,560
Speaker 3: Issues like that, and also different methodology you used across

504
00:27:00,600 --> 00:27:04,159
Speaker 3: different different sorry terminology used across different funds, so the

505
00:27:04,200 --> 00:27:07,119
Speaker 3: same time might mean quite different things in different funds.

506
00:27:07,119 --> 00:27:09,879
Speaker 3: So best piece of advice is to ask lots of

507
00:27:10,000 --> 00:27:13,959
Speaker 3: questions and maybe approach with a degree of skepticism and

508
00:27:14,080 --> 00:27:16,560
Speaker 3: if in doubt, maybe see several forms of advice before

509
00:27:16,600 --> 00:27:19,200
Speaker 3: putting too much money into private credit. I think it's

510
00:27:19,200 --> 00:27:21,760
Speaker 3: got an important role to play in the economy, but

511
00:27:21,840 --> 00:27:24,360
Speaker 3: there are some risks for investors at the moment due

512
00:27:24,359 --> 00:27:26,240
Speaker 3: to the range of practices that we've seen.

513
00:27:26,440 --> 00:27:30,160
Speaker 1: It's funny it reminds me maybe two decades ago when

514
00:27:30,680 --> 00:27:34,280
Speaker 1: in the early days of funds management in Australia active

515
00:27:34,320 --> 00:27:36,840
Speaker 1: funds management. Obviously, there was a boom period, as there

516
00:27:36,880 --> 00:27:39,919
Speaker 1: always is when something is new, and the whole thing

517
00:27:39,920 --> 00:27:42,760
Speaker 1: about fees was a big fuzzy area, and then slowly

518
00:27:42,800 --> 00:27:47,760
Speaker 1: but surely this management expense ratio that was standardized emerged

519
00:27:47,800 --> 00:27:50,080
Speaker 1: and then at last people could see not just what

520
00:27:50,200 --> 00:27:52,679
Speaker 1: the fund was returning, but what they were paying in fees.

521
00:27:52,760 --> 00:27:55,479
Speaker 1: Is there something that you might aspire to somebody in

522
00:27:55,480 --> 00:27:56,679
Speaker 1: that private credit area.

523
00:27:57,480 --> 00:27:59,880
Speaker 3: Yeah, absolutely, So we've called for the industry to lift

524
00:27:59,920 --> 00:28:02,400
Speaker 3: it standards and it's been great to see a lot

525
00:28:02,400 --> 00:28:04,280
Speaker 3: of people in the industry respond to that, and the

526
00:28:04,320 --> 00:28:07,240
Speaker 3: Financial Services Council is leading a piece of work that

527
00:28:07,320 --> 00:28:09,159
Speaker 3: will hopefully take on a lot of the issues that

528
00:28:09,200 --> 00:28:11,360
Speaker 3: we've raised, but that's going to take a little while

529
00:28:11,400 --> 00:28:14,200
Speaker 3: to play out. So in the meantime, as I said,

530
00:28:14,359 --> 00:28:17,200
Speaker 3: wise to ask lots of questions, because look, we saw

531
00:28:17,240 --> 00:28:20,639
Speaker 3: some funds that probably raise less concerns for us, but

532
00:28:20,720 --> 00:28:23,800
Speaker 3: some that raise some fairly serious concerns and it's a

533
00:28:23,840 --> 00:28:27,720
Speaker 3: little bit hard for investors to navigate through that system

534
00:28:27,760 --> 00:28:30,399
Speaker 3: and understand what they're dealing with until we see that

535
00:28:30,480 --> 00:28:32,160
Speaker 3: lifting standards across the industry.

536
00:28:32,600 --> 00:28:36,000
Speaker 1: Okay, very good. One last question, which we touched off

537
00:28:36,000 --> 00:28:38,880
Speaker 1: at the start, about self managed super funds. It seems

538
00:28:38,880 --> 00:28:42,320
Speaker 1: to me they're in the news again in terms of

539
00:28:42,640 --> 00:28:46,240
Speaker 1: the standards for want of a better word, in that

540
00:28:46,520 --> 00:28:51,520
Speaker 1: entire area across the regulation of them, the advice to them,

541
00:28:51,760 --> 00:28:54,560
Speaker 1: the auditing of them. But when I look more closely

542
00:28:54,720 --> 00:28:57,680
Speaker 1: at it, it seemed to me that the vast bulk

543
00:28:57,720 --> 00:29:01,240
Speaker 1: of the issues that you had were in the area

544
00:29:01,280 --> 00:29:06,760
Speaker 1: of commencement. In these issues as they apply to people

545
00:29:06,760 --> 00:29:10,360
Speaker 1: who are starting self managed super funds as opposed to

546
00:29:10,440 --> 00:29:14,480
Speaker 1: the ongoing maintenance of a self managed super fund, which

547
00:29:14,520 --> 00:29:17,320
Speaker 1: there's a million about one point two million or so people,

548
00:29:17,720 --> 00:29:20,280
Speaker 1: Is that the hotspot as such for you as a regulator,

549
00:29:20,360 --> 00:29:23,840
Speaker 1: the commencement part, or am I missing it? And it's

550
00:29:23,880 --> 00:29:25,800
Speaker 1: an issue that the issue is more broad.

551
00:29:27,240 --> 00:29:29,320
Speaker 3: Look, it's probably where we've got the biggest role. So

552
00:29:29,840 --> 00:29:33,200
Speaker 3: in general, smsfs are probably more regulated by the ATO

553
00:29:33,360 --> 00:29:36,240
Speaker 3: than they are by ASSEX. So we don't specifically regulate

554
00:29:36,360 --> 00:29:39,960
Speaker 3: smsfs themselves, but what we do regulate is financial advice,

555
00:29:40,280 --> 00:29:43,320
Speaker 3: and obviously one of the most significant moments in terms

556
00:29:43,360 --> 00:29:46,200
Speaker 3: of providing financial advice or receiving it as an investor

557
00:29:46,320 --> 00:29:49,400
Speaker 3: is around that decision to set up an SMSF. Now,

558
00:29:49,440 --> 00:29:51,840
Speaker 3: if there's advice that's provided along the way, we might

559
00:29:51,880 --> 00:29:54,160
Speaker 3: also be interested in that. But what we've recently done

560
00:29:54,240 --> 00:29:57,360
Speaker 3: is have a look at advice to establish an SMSF

561
00:29:57,440 --> 00:30:00,920
Speaker 3: because that is a high stakes decision. Acknowledge this mss

562
00:30:01,040 --> 00:30:03,360
Speaker 3: can be rightful lots of people, but they're not right

563
00:30:03,400 --> 00:30:03,960
Speaker 3: for everybody.

564
00:30:04,000 --> 00:30:06,880
Speaker 2: So we really wanted to be to understand how.

565
00:30:06,760 --> 00:30:08,840
Speaker 3: All that advice is operating at the moment, and we

566
00:30:08,920 --> 00:30:11,240
Speaker 3: flagged a few issues that we think the industry needs

567
00:30:11,240 --> 00:30:13,000
Speaker 3: to focus on to make sure that people are getting

568
00:30:13,000 --> 00:30:14,040
Speaker 3: appropriate advice.

569
00:30:15,000 --> 00:30:16,720
Speaker 1: And we do say that on the show all the time.

570
00:30:16,760 --> 00:30:19,240
Speaker 1: They're great as long as you understand what you're doing,

571
00:30:19,320 --> 00:30:21,560
Speaker 1: as long as you're prepared to do the work and

572
00:30:21,760 --> 00:30:25,040
Speaker 1: have your eyes wide open. And they certainly aren't for everybody,

573
00:30:25,240 --> 00:30:30,160
Speaker 1: and the less you are experienced in financial matters, the

574
00:30:30,240 --> 00:30:33,520
Speaker 1: less suitable they are to you. I would think, Alan Kirkland,

575
00:30:33,520 --> 00:30:35,160
Speaker 1: marvelous to have you on the show. Thank you very

576
00:30:35,240 --> 00:30:35,920
Speaker 1: much for coming on.

577
00:30:36,720 --> 00:30:37,680
Speaker 2: It's been a real pleasure.

578
00:30:37,720 --> 00:30:41,880
Speaker 1: Thanks James, that was Alan Kirkland. Folks the Act Commissioner

579
00:30:41,960 --> 00:30:43,720
Speaker 1: and great to have him in the great spectrum of

580
00:30:43,800 --> 00:30:46,760
Speaker 1: issues there. If you've any questions, aren't any of those issues?

581
00:30:46,840 --> 00:30:48,960
Speaker 1: Let us know the money pots. They're at the Australian

582
00:30:49,040 --> 00:31:02,120
Speaker 1: dot com dot au. Talk to you soon. Four