SUPERANNUATION

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Superannuation Investment Schemes in Australia 1 SUPERANNUATION INVESTMENT SCHEMES IN AUSTRALIA Name Course Professor’s Name Institution Location Date

Superannuation Investment Schemes in Australia2 Superannuation Investment Schemes in Australia Self-managed superannuation Mr. Brian Claxton invested worth $250,000 retirement benefit and parts of his savings in a Prime Trust Investment. However, the money later disappeared. Luisky is the founder of the investment scheme. The Prime Trust investment liquidator Sterling Horne admits that the company was controlling more than $140 million. Don Steel is also a Prime Trust investor who lost more than $130,000 of his retirement living to the sound investment. When Don joined the investment trust 2005, he admits that the company was under proper management with a high level of credibility. The company also made much profit by the time he joined. The reason that made tens of millions to disappear from the Brown Luisky Company was management wrangles and personal interests of the management individuals. Another company that was linked to Brown Luisky was also paid abnormal amounts of money. That happened after the Prime Trust had been listed in the stock exchange in 2013. This suggested that it was the investor's money that was used to pay that huge amount ( Liu and Arnold 2010 . The investors were not consulted in the process. The directors also changed the constitution of the Trust to allow the payments without consulting the members. Prime Trust is a property trust that specializes in retirement diligence. Before joining the faith, Brian failed to consider well the likelihood of the Trust continuing to make profits in the future and also the management strategy of the Trust. The belief was under the management of Brown Luisky. Luisky was a self-centered man and used investor's money poorly. Again, there was reduced involvement of the members of the Trust in the changes that were being introduced

Superannuation Investment Schemes in Australia3 into the Trust. The standards that were breached in this case were; failure by the management to act with personal integrity and as an independently minded professional for the benefit of each client and also working in a manner where the relevant provider derives own inappropriate advantage. This documentary gives more illustrations on the self-managed superannuation. The case of the Kyabram Baptist Church members whose faith has been shaken by the collapse of the investment scheme that had more than sixteen thousand members. The church had $130000 in this investment scheme, which included the church collections and life savings of the members. The investment had no deposit protection. This church thought that investing in the project was a way of funding back to the community. The decision by the board of directors to allow the payments of the investors' money to another subsidiary company was absolute thievery. The act contradicted the integrity standards of the Australian Security and Investment Commission (ASIC). Another scenario where this standard was breached in a case where the trust investment money is divided into the sons of Brown Luisky and the changing of the constitution without the consent of the members. The management of the Trust is also revealed to be selfish. The decisions they make does not benefit its members. In the case of Kyabram church group also indicates that there was little consideration of the legalities of the scheme before they could invest their money in it. The project had no deposit protection, which means in case something happens to the capital, there would be no compensation. The ASIC standard that was breached here is the failure of informed consent and agrees to maintain records relevant to the advice provided, following appropriate privacy, regulatory, and confidentiality obligations.

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Superannuation Investment Schemes in Australia4 Also, the case of Kim Branley a Banksias' investor who was advised to put the compensation money to a Cherish Fund Ltd after the death of her husband from a tragic road accident. She risked losing money as well from the trust investment scheme. The problem was caused by her lawyer, who advised her to invest that money in that scheme. Kim did not involve the superannuation company in this case, and instead, she decided to undertake the task with the knowledge of her lawyer. Another case of the Banksias' security group is the case of the golf club of the Kyabram. The investment scheme is said to have become insolvent. Several members had deposited their money and saved with the Banksia from the club. More than 240 members were from the golf club. Later, the scheme disappeared with more than 1/3 of the member's savings The best solution to these superannuation cases is to involve the superannuation companies in case one is willing to invest with any retirement trust schemes. The application of these three standards by the Trust investment schemes will ensure Good Corporation and teamwork. The investors will also have a feeling of investing much money into the business. This will attract more investors as well, resulting in higher profits for the company. However, many investment schemes are much more selfish, and therefore they launch these schemes to disappear with members' savings ( Gold, 2008) . The government as well should tighten the rules and also ensure that all the relevant service providers fully implement the ASIC standards. The appropriate service providers must also meet the minimum requirements as stipulated by the law. This will reduce the cases of poor or lack of security to the deposits.

Superannuation Investment Schemes in Australia5 Nonbanking institutions In the recent past, there has been an emergence of several nonbanking institutions in Australia. Most of the nonbanking groups, in most cases, are not regulated by the ASIC standards. They are independent, and in most cases, they come as a result of an individual group's opinion. For instance, people who are working together or rather a particular group of people sharing a common goal, for example, a company, the workers may decide to begin an investment scheme where they contribute money and save that money. This can be done daily or weekly basis based on the terms of the agreement of the members of the people in that group. This paper, based on the documentary, will tend to analyze some of the examples of the nonbanking groups and how they operate as opposed to the banking group and find out the exact features that differentiate the nonbanking groups from the banking groups. Banksia security is an excellent example of a nonbanking group. The scheme protects money. This investment group gives loans and also offers financial support to many members. For instance, the golf club members are the best example of the beneficiaries of the Banksia. What makes this investment not to categorize as a bank group is a fact that it does not adhere to the ASIC standards of money protection ( Newell, 2006) . The scheme gives no security to deposits by the investor. In case of loss or an eventuality, they don't provide compensation to their members. The ASIC standards state that a service provider must ensure to take into account the broad effects arising from a client on their advice. This means any banking group must be responsible and liable to anything that happens to the investor's money. The Prime Trust investment trust protects the investor's money. This investment scheme also does not qualify to be a banking group. Banking schemes have the investor's interest first.

Superannuation Investment Schemes in Australia6 The laws that govern the investor's interests are also well stipulated. In case that one may decide to persuade the board of directors to change the constitution of the company for his benefit without the consent of the members disapproves the Prime Trust to be a banking group investment. Brown Luisky has the mandate to intermingle with the investor's money to the extent that he goes ahead to share the investor's money to his sons. Luisky, in this case, also pays a subsidiary company with the investor's money from another company. According to the ASIC standards, the service provider should only act based on the free, prior, and informed consent of the client ( Phillips etal. 2009) . Meaning no decisions should be made outside the permission of the client. The reason behind people preferring nonbanking is simply because it is easier to join, and it is specif to a group of people sharing the same interest. For example, it is not easier to find separate groups in nonbanking. For instance, many members of the Banksia are Golf Club members, and the majority of the Prime Trust are the retirees. This means that members of these particular groups share many things in common. Another reason why people prefer nonbanking groups is that it is easier to join and even come out ( Hartnett, 2010) . One does not need to undergo several processes to join nonbanking as opposed to banking groups. Nonbanking groups also charges minimal interests to customers. They help the community and improve the living standards of the older adults and also the life of underprivileged people as it is a community- based and investment scheme. Many fraudsters also operate nonbanking to assist them in money laundering business. This will help them evade tax and launder illegal money. It is clear from this documentary that the majority who are associated with nonbanking finally regret. The outcome is usually not palatable. Money disappears, and the investment schemes get dissolved. The best way to ensure that nonbanking best their members are through

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Superannuation Investment Schemes in Australia7 streamlining them with the rules and regulations that govern banking in Australia. The government should look into the options on the provisions of the ASIC standards and involve these investment schemes in their programs instead of leaving them to work independently. This will reduce the cases of money disappearing to specific individuals who are selfish. According to the ASIC standards, any service provider who will not obey the provisions of the rules will be thoroughly investigated, and discipline will be issued through the Code of the Monitoring body to be undertaken following ASIC's approval and oversight of that body. Property investment There are several ways to invest money. Some people may decide to take the money to the bank; others may venture into a business. Property investment analyzes what a person should do in case he decides to invest. Before anyone could think or imagine spending, thorough research is required on the type of investment and the track records of the investment from the people who are already inside the venture. This research will involve market research, property research, promotion research, price, and place research. After a person has undertaken all those necessary researches is when he is supposed to start investing. This document outlines some of the cases that are happening in real life. People are losing money through some investment schemes. Critical analysis of this documentary shows that many people are desperate and ignorant of the kind of investments that they are expected to start. The case of Don Steel and Brian Claxton, who are the victims of the Prime Investment disappearance with money, can be termed to be ignorant of the kind of investment that they engage themselves in ( Clare, 2001) . Both Brian and Don did not involve the superannuation companies to assist them with pieces of advice. Instead, they just decided to be part of an

Superannuation Investment Schemes in Australia8 investment that they knew nothing about. Brian says that he joined the Prime Trust investment company due to its credibility records back in 2005 without clearly looking into the likelihood of the credibility records in the long term. The standard that most investors breach is that they usually fail to consider the high level and relevant skills and knowledge from the service providers ( Worthington, 2006) . The case of the Kyabram church members who lost money to Banksia due to the inability to realize that the investment security did not have protection to the investor deposit was as a result of ignorance. Investment security ought to have all its rules stipulated clearly and defined so that in case of an event of any uneventfully, people get compensated. All investment companies should provide thorough training to their members so that they know what kind of investment they are yet to get involved in. This will help them understand what is expected of them and precisely what they are required of.

Superannuation Investment Schemes in Australia9 References mms://winmedia.usq.edu.au/offair/four_corners_a_betrayal_of_trust_20130304.wm Royal Commission’s website: https://financialservices.royalcommission.gov.au/Pages/default.aspx. Education and training requirements for financial advisers. Executive summary issued by the Royal Commission FASEA Code of Ethics for Financial Advisers Newell, G., 2006. The significance of property in industry-based superannuation funds in Australia. SIGNIFICANCE , 22 , p.26. Gold, M., 2008. Financial Sustainability and the Imperative for Reform in Investment Organisation in Australia's local government sector. Accounting, Accountability & Performance , 14 (1), p.35. Phillips, P.J., Baczynski, M. and Teale, J., 2009. Self managed superannuation funds and the bear market of 2007-2008. Australasian Accounting, Business and Finance Journal , 3 (1), p.5. Hartnett, N., 2010. Trust and the financial planning relationship. JASSA , (1), p.41. Clare, R., 2001. Are administration and investment costs in the Australian superannuation industry too high. ASFA Research Centre, www. superannuation. asn. au . Liu, K. and Arnold, B.R., 2010, June. Australian superannuation outsourcing: fees, related parties and concentrated markets. In 23rd Australasian Finance and Banking Conference . Worthington, A.C., 2006. Predicting financial literacy in Australia.

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