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Marac admits errors, and says not again

Wednesday 23rd of September 2009

The offer, which is underwritten by First NZ Capital Securities, and is part of a plan to get achieve its goal of becoming a publicly listed banking and asset management company.

The company says that the capital raising has a number of benefits for MARAC investors:

  • $35m of new equity capital into MARAC, ensuring compliance with bank and NBDT capital requirements;
  • MARAC's balance sheet will be further strengthened through the sale and transfer of impaired or likely to be impaired property development loans for total consideration of circa $175m, comprising of $125m of cash and a loan note of $50m;
  • The additional equity and proceeds from property development loan divestment will increase MARAC's liquidity; and,
  • PGC will be debt free and hold additional cash, providing it with financial flexibility to support growth initiatives of its businesses.
During a press conference PGC admitted that Marac had made mistakes during the boom, but it assured investors it has learnt the lessons.

One of the mistakes was that it "strayed" into property development to source profits and enhance dividends.

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The Report (p.14) contains the following recommendation for FAPs: "Disclose commissions as a dollar figure. While commissions can be disclosed as either a percentage or dollar figure, we consider disclosure in dollar terms to be good practice to assist with investors readily understanding what the adviser will get out of the advice process." Disclosing commission in dollar figures was one of the 3 options floated in the April 2018 Disclosure Requirements discussion paper from MBIE. This option was ultimately rejected in favour of a principles-based approach. The examples of commission disclosure in the resulting Regulations ("Connor and Ari") are expressed in percentage terms. While the FMA may hold the view that disclosure in dollar terms is "good practice", this is not where the regulations landed at the conclusion of the 2018 consultation process.
1 day ago Paul Flood
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@The Laird - No, not really. The headline of this article could equally have been: "Advisers embrace Westpac after upfront commissions increased to highest across the main banks."
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Doesn't this result call into question the criticism from certain quarters that Mortgage Advisers are driven predominantly by commission considerations?
1 day ago The Laird
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@first time caller - I can see the complexity you highlight, but as above, investors should be able to see what they are paying without having to reference multiple documents. Investment admin can track and report deductions for tax, withdrawals, fees et al, would be /should be straightforward to aggregate advice fees into costs at member level... at least I hope so.
2 days ago Goldcard
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@goldcard - how would you propose that a fund manager calculates the TER to include adviser fees given not all clients pay them and different advisers charge different fees, not to mention some advisors charge different fees to different clients? The advice fee gets disclosed in the adviser's disclosure statement and the statement of advice, so the client can add that to the published TER of the fund they are invested in to see how much they are paying overall.
3 days ago First time caller