Angas Securities has welcomed the opportunity to consult with the Australian Securities and Investments Commission (ASIC)about reforms designed to strengthen regulation in the debentures sector.
ASIC released Consultation Paper 199 – Debentures: Reform to Strengthen Regulation in February this year and has flagged plans to toughen oversight of the debenture sector.
Angas Securities Executive Chairman Andrew Luckhurst-Smith said many of the proposed reforms in the Consultation Paper would result in debenture issuers being regulated in a similar fashion to banks.
“Regulatory amendments are increasingly requiring non-bank financial providers to be scrutinised as banks without any of the reciprocal benefits such as the Federal Government guarantee,” Mr Luckhurst-Smith said.
“That said, we see significant benefits flowing to companies such as Angas Securities and its investors through enhanced liquidity and capital requirements, along with measuring assets with a risk weighted methodology.
“However, the consultation paper also sets-out suggested changes to the obligations and responsibilities of trustees which, under the current legal and regulatory framework, would appear to be unworkable.”
As a listed and rated issuer, Angas is already subject to numerous levels and forms of scrutiny and at a much higher standard than its unlisted counterparts. We engage in an annual audit and half yearly review. As such, we believe a distinction should be drawn between those issuers that are listed and rated and those that are not.
The consultation paper suggests maintaining a capital ratio of 8 per cent of risk weighted assets. “Angas would not have any practical difficulties in meeting and maintaining the proposed minimum capital requirements,” Mr Luckhurst-Smith said.
Mr Luckhurst-Smith said Angas’ Board of Directors had concerns about ASIC’s proposal omitting any requirement for the trustee to act reasonably.
“Angas is all for engaging in a process of meaningful communication with its trustee, but a balance must be struck,” Mr Luckhurst-Smith said.
“Requiring an issuer to regularly report to its trustee is one thing; requiring a trustee to declare its responsibility for the contents of a disclosure document is quite another.”
Mr Luckhurst-Smith said the Company was focused on working with ASIC to ensure the best outcome for investors.
“Angas Securities will continue to engage in this consultation process and looks forward to a productive and meaningful outcome, which will serve to strengthen the broader industry,” he said.