News Round Up

Hanover ad banned, New adviser disclosure bill passed, Delay in extending savings scheme, MFS in top 200.

Monday, October 16th 2006, 7:08AM

Hanover Funds Management’s ads for its new Global Growth Fund have been banned by the Securities Commission as “they are likely to mislead or confuse investors about the potential returns.”

The ads in question were ones which said the fund had has a 10% potential return; or has a 50% potential return without clearly stating that the possible returns on the investment at maturity are 50% or zero.

The commission considered the advertisements were misleading or confusing because:

Investors may think that the 10% figure means that they would receive a return of 10% each year. This is not the case. There is no annual return for this investment
Investors are likely to believe from the advertisements that the return is potentially greater than is actually the case. Even if they receive the 50% return at the end of five years, this equates to less than a 10% annualised return on the investment. They may receive zero return.

Hanover has cooperated with the commission and agreed to write to all investors who subscribed to the fund to make sure they correctly understand the returns

"We are happy to make any changes to our advertising to deal with concerns raised by the Commission. The announcement in no way reflects on the integrity of the product," HFM chairman Greg Muir says.

Delay in extending savings scheme

Tax changes have caused a delay in the report of the working party on extending the state sector retirement savings scheme (SSRSS) to the wider public sector. The government is looking at extended the scheme to the non-core public sector – which includes which highly populated branches as the district health boards and the tertiary education sector.

The working party, headed by former Council of Trade Unions president Angela Foulkes, was to have reported this month but will now not report until late this year.

New adviser disclosure bill passed
The Securities Legislation Bill, which includes changes to adviser disclosure rules, was passed by Parliament on Thursday. The changes have the support of the opposition, and include giving the Minister of Commerce powers to extending the disclosure requirements of advisers.

This includes disclosure around commissions, fees, qualifications, and any disciplinary action against the adviser. The form those regulations may take is the subject of a current discussion document being considered by officials.

MFS in Top 200 index
MFS Limited has been put into the S&P/ASX 200 index replacing Excel Coal. Excel Coal's removal is a result of the takeover by Peabody Energy Corporation, and court approval of the scheme of arrangement.

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