[Weekly Wrap] Who has the responsibility?

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One of the questions that’s been asked this week is how much responsibility the Financial Markets Authority should really be expected to shoulder for the collapse of Ross Asset Management.

Friday, July 26th 2013, 2:50PM 2 Comments

by Susan Edmunds

Only a couple of weeks ago, the Ross investors group spoke out after Sean Hughes announced he would not be seeking another term at the FMA. They said that was tantamount to admitting that the organisation has let investors down.

Now another of their number, Kapiti man Barry Prince, has made a complaint against the FMA. He said the fact that Ross had AFA status with them was one of the reasons he felt comfortable handing over his money. Following him up once concerns were raised was too late, he said.

The FMA said the first it knew of the complaint was when the media reports surfaced. It did what it could and its hands were tied, a spokesman said, it had to let Ross become an AFA because he met the relevant criteria. As an accountant, not all the normal requirements applied to him. That’s prompted debate among commenters, who weren't all convinced.

It was interesting then, to read Hughes’ comments about the lack of financial literacy in this country. He said people needed to take more responsibility for their investments.

But if people are so poorly informed, perhaps it makes it even more important that the regulator does not adopt an “ambulance at the bottom of the cliff” approach to failed investment schemes and instead spends more time out in the community trying to stop problems before they happen. A more expensive approach, presumably.

There are signs that may be happening. The FMCB is not far off and it looks likely that advisers who want to offer DIMS will have to jump through a few extra hurdles to do so. DIMS was raised as an area of concern because of Ross’ collapse.

Also during the week, I talked to Milford Asset Management. Anthony Quirk said investors were happy to pay a higher performance fee and a lower base fee even in times when that meant significant profits for the fund manager.

On the mortgage front, the big news this week was the OCR. Questions are being asked about when the next move will be but Philip wrote a blog today in which he said many people aren’t looking at the full picture.

There are also some new job listings worth checking out and some moves on the people front.

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