Financial Services Council


Bruce Billson: Equity crowdfunding framework will be on the table by spring

4:58AM | Friday, 10 April

The federal government has put a timeline on its new legislative framework for equity crowdfunding, which will make it easier for small businesses and startups to raise capital through online crowdfunding platforms.   The proposed legislation will allow SMEs and startups to raise capital by offering equity to a large number of small-scale retail investors through platforms such as VentureCrowd and Equitise.   Currently, crowdsourced equity funding is only available to wholesale investors with more than $2.5 million in investable assets or annual earnings of around $250,000.   Small Business Minister Bruce Billson told SmartCompany he hopes to introduce legislation to allow retail investors to buy equity in private businesses during the spring session of Parliament.   “This is an important opportunity for small businesses, startups and those businesses going through an anticipated period of growth to access finance,” says Billson.   Billson says since the global financial crisis, consolidation in the bank and finance space had made it increasingly difficult for some businesses to get financing through traditional lenders.   “This is an important alternative source of funding that will sit alongside traditional funding models,” he says.   “We want to make available to Australian entrepreneurs and business leaders a wider range of affordable and accessible finance to support their enterprises and the Australian economy.”   Billson yesterday hosted a roundtable in Sydney with industry stakeholders, including Financial Services Council chief economist James Bond and Equitise co-founder Chris Gilbert, to address recommendations previously made by the Corporations and Markets Advisory Committee (CAMAC).   CAMAC recommended Australia introduce legislation allowing retail investors to invest up to $10,000 a year via equity crowdfunding, across at least four enterprises, and allow companies to raise up to $2 million per year on such platforms.   Billson says yesterday’s discussions canvassed the potential elements of a "sure footed" crowd-sourced equity funding model, as well as the role and remuneration of intermediaries in crowdfunding; how to consider secondary markets; and the need to keep a lid on compliance and regulatory costs so they are not disproportionate to the funds raised.   The roundtable also discussed whether there was a need to create a distinctive entity structure for crowdfunded enterprises or whether fine-tuning existing company law would be good starting point to legislation.   Billson says a second roundtable will be held with the Melbourne startup community in coming weeks.   “I was really encouraged by the vigour and willingness and expertise shared yesterday,” says Billson.   “We are now trying to tease out the details of work best for businesses and for the economy,” he added.   This story originally appeared on SmartCompany.   Follow StartupSmart on Facebook, Twitter, and LinkedIn.

Equity crowdfunding: What Equitise learnt when it met with government

9:19AM | Monday, 29 September

Support in numbers is something I have learnt a great deal about this week when I reflect on my trip to Canberra to meet with various government officials to discuss the current execution timeline of crowd sourced equity funding (CSEF) in Australia.   All in all it was a very positive day for the development of the industry and Equitise looks forward to continuing to work with government officials into the future to expedite the process of CSEF in Australia.   The day kicked off with a 5.30am alarm ringing in my ear, I was on the dual prop flying Kangaroo by 7.40am and landing in Canberra by 8.40am with fellow industry stakeholders by my side James Bond (Chief Economist of the Financial Services Council) and Ben Heap (CEO of AWI Limited).   Treasury   The first meeting was with Treasury at 9.30am where we met with the team that is driving the review process of researching, analysing and assessing CSEF globally. These guys have also been pulling apart the CAMAC paper over the past four months and considering its recommendations.   After meeting with Treasury it was obvious that they are advocates for the rollout of CSEF in Australia. For those that are wondering, the role Treasury play in the process (apart from forming a position on the current state of play globally) is to essentially draft the regulation impact statement when the federal government decides to take a stance and press forward with expediting the legislation.   It really was a pleasure meeting with the team driving this in Treasury and sharing our collective thoughts as key stakeholders in the process from both an intermediary (Equitise), an investor (Ben Heap/AWI Limited) and an industry representative’s perspective (James Bond). The great news is that it seems the stakeholders and Treasury are very much on the same page with thoughts on the CAMAC proposal and potential paths forward for this exciting new asset class that I am very confident will be developing in Australia sometime next year.   We left Treasury at 10.30am and made our way to the front doors of Parliament House.   Industry   Our next meeting was with the senior advisers to Minister of Industry, Ian Macfarlane, where we discussed the “potential” release of an innovation paper, the same paper I was chatting to Malcolm Turnbull about just a couple of weeks ago that summarises ways to improve/innovate our digital economy (including the issues with employee share options – ESOP). I got the strong impression that this will be released any day now and am guessing it has been held up due to other important breaking news – completely fair enough.   It was hugely productive chatting with Minister Macfarlane’s senior advisers and hearing the government’s positive position on CSEF. Without being able to divulge much information about the exact position of industry, it was obvious that CSEF is being embraced internally and is 100% supported by industry.   Small business   We wondered across the hallways of Parliament House to meet with the Small Business Minister Bruce Billson and one of his senior advisers to discuss his thoughts on CSEF and its importance to the Australian small and medium-sized enterprise community.   Minister Billson is understandably a huge advocate for this method of alternative financing for businesses across Australia. With more than 30% of the two million SMEs operating across the country not having access to expansion financing for their businesses last financial year, Minister Billson certainly understands first-hand the difficulties faced by fledgling Australian enterprise.   After meeting with Minister Billson it quickly became apparent the support for CSEF was strong in a number of facets of Parliament House.   I guess the question on everyone’s mind is, if there is huge support, why isn’t it moving faster?   Essentially, it is in retrospect. Just not as fast as key stakeholders would hope for.   What we need to understand is that this is a new asset class, it is risky for investors and the government just wants to ensure that they do it properly the first time around. As opposed to having a quick and dirty shot at it, not getting it right and then having to disrupt an emerging industry with another change in policy one year down the track.   A word of advice though, key stakeholders in the CSEF space need to band together to grow the number of voices in this space. As you will likely take away from this blog post, government is well aware and very supportive of CSEF; however, what we are lacking is absolute urgency to get it pushed along faster, but in a positive way.   Chris Gilbert is co-founder at Equitise. This post originally appeared on LinkedIn.

THE NEWS WRAP: Regulatory reforms should open up credit card market competition

3:29PM | Sunday, 16 March

A move by the Reserve Bank to reform credit card regulations is likely to open up new competition by shifting oversight for credit card issuers away from banking regulator Australian Prudential Regulation Authority.   The reforms will likely mean companies will no longer need to register as a bank in order to issue credit cards, with analysts saying the move is likely to open up competition in the sector.   “The issue with the access arrangements currently is that they're quite restrictive. Companies essentially need to be an authorised deposit taking institution, a bank,” BIS World senior analyst Caroline Finch told the ABC.   “Banks are under a lot of regulation so this has been a significant barrier to entry, particularly to foreign players, and for anybody who's not already a bank it's quite hard to get yourself registered as a bank.”   Alan Joyce defends Qantas job cuts   Qantas chief executive Alan Joyce has defending plans to slash jobs at the airline during a Senate hearing late last week.   “I absolutely believe that the Qantas staff are in the need for the company to change and know that the best way to secure as many jobs in the Qantas group is to have a successful, profitable business going forward,” Joyce told the Senate inquiry.   “We have to make, I will say again, some tough decisions. It is not easy having to make 5000 people redundant.”   Super pressure grows on small funds   The pressure on superannuation funds is growing, with smaller funds overseeing less than $5 billion in assets increasingly being pushed to merge or be swallowed up by their larger competitors.   According to Financial Services Council chief executive John Brogden, the federal government’s introduction of the MySuper scheme and reforms to SuperStream were pushing compliance costs beyond the reach of many smaller funds.   “Most of the pressure is coming from government changes, whether they be the cost of changing internal processes or adopting new IT systems,” Brogden says.   “The smaller funds will have a lot of pressure on them to prove that they're viable beyond the next two or three years. The smaller you are, the more pressure is going to be on you.”   Overnight   The Dow Jones Industrial Average closed down to 16065.7 points. The Aussie dollar is down to US90.04 cents.

THE NEWS WRAP: Swan says super changes won’t make a “significant contribution” to the budget

4:24PM | Wednesday, 3 April

Treasurer Wayne Swan has admitted proposed reforms to the superannuation system will not make a “significant contribution” to budget savings, as criticism of the proposed changes mounts.   “The fact is that we have a substantial savings task in this budget and whatever changes are made in super will not be making a significant contribution to that savings task,” Swan said.   However, while industry groups acknowledge the challenges posed by a rapidly ageing population, they remain concerned about the lack of detail around the government’s proposed reforms.   “At the moment every Australian thinks their super is at risk because there's no clarity from the government. The government needs to outline what their changes are and end the games,” Financial Services Council chief executive John Brogden said.   Glenn Stevens appointed as Reserve Bank governor for another three-year term   Reserve Bank governor Glenn Stevens has been appointed for another three-year term as head of Australia’s central bank.   The extension, announced on Wednesday by Treasurer Wayne Swan, will see Stevens serve until 2016, when deputy governor Philip Lowe is tipped to take over the role.   “I congratulate governor Stevens on his reappointment, which acknowledges his enormous contribution to Australia's economic resilience through his conduct of monetary policy, as well as his enduring focus on financial stability working together with our other key regulators,” Swan said.   Cyprus accepts €10 billion bailout conditions   Cyprus has formally accepted a set of conditions that will see the troubled island nation eligible for a €10 billion ($A12.27bn) bailout.   Under the deal, the Cypriot government will close the bankrupt Laiki Bank, with all deposits under €100,000 transferred to the Bank of Cyprus, while deposits over €100,000 could be taxed at rates of up to 60%.   “The Cypriot authorities have put forward an ambitious, multi-year reform program to address the economic challenges they face,” said International Monetary Fund managing director Christine Lagarde.   “The overarching goals are to stabilise the financial system, achieve fiscal sustainability and support the recovery of economic activity to preserve the welfare of the population.”   Overnight   The Dow Jones Industrial Average is down 0.8% to 14550.4. The Aussie dollar is down slightly to US104.57 cents.

Businesses must innovate to combat retirement surge: Report

3:50AM | Monday, 11 March

A surge of baby boomers reaching retirement age won’t affect the labour market as much as previously thought but businesses still need to plan in advance, according to a new report.

Financial planning package leaves experts divided

4:23AM | Thursday, 28 April

The Federal Government’s highly-anticipated financial planning package has been met with a mixed response, with planners concerned the changes could increase costs for consumers.

Disability scheme could lead to lucrative market

3:55AM | Wednesday, 2 March

The disability sector is tipped to become a multi-billion dollar market with the proposal of a $12 billion insurance scheme, which seeks to treat disabled people as consumers rather than patients.