New master trust regulations have trapped its first victim after financial planning group Chapel Road was forced to switch master trusts before regulations come in to force later this month.
Chapel Road was forced to switch its clients out of the Ausmaq master trust after the National Australia Bank subsidiary withdrew the product to comply with Australian Securities and Investments Commission (ASIC) requirements concerning investor directed portfolio services (IDPS).
The changes resulted in Chapel Road clients accruing a capital gains tax bill as their funds were rolled over into Austchoice and Navigator products.
Chapel Road general manager Bill Davies says the change was unavoidable.
“We outsourced into other master trusts which wasn’t a problem but we were reluctant to make the move in the first place,” Davies says.
“Issues such as capital gains tax had to be dealt with and while the change was forced upon us, it is the client’s responsibility to deal with any tax issues which arise. We were concerned about that but we just had to face up to it.”
According to Ausmaq chief operating officer Jeff Armbruster, the decision was made last year to withdraw the master trust to comply with the ASIC regulations which come into force later this month. However Davies and Armbruster stress the move did not generate ill will between the two groups.
The ASIC changes bring wraps and master trusts, under the banner of IDPS, in line with other investment products. Operators are required to hold a licence and adhere to a range of compliance and reporting requirements.
