Corporate Trustee Services August Newsletter - issue #4
A message from David Callanan
In June, Public Trust said farewell to Andrew Hughes, General Manager Corporate Trustee Services, after three years leading our CTS team.
It has been an honour over the last few weeks to step into Andrew’s shoes and lead the team in an interim capacity.
I’ve been with Public Trust since 2019, when we brought together our legal and governance, and risk and compliance functions under my leadership as Chief Legal and Risk Officer.
While my recent focus has centred on our risk and legal disciplines, I have previously worked in the retirement savings and insurance sectors, and continue to be a passionate advocate for good governance so my experience fits the CTS team profile well.
In the spirit of reflection and new beginnings inspired by Matariki, I have reflected on the mahi that lies ahead for our business in FY23. There are plenty of opportunities for us to improve many of our systems and processes, making us more efficient, more effective and enabling us to deliver even greater service for our clients.
We also know that there is opportunity for Public Trust to engage and contribute more broadly to the industry in a way that empowers Kiwi investors. The CTS team will be focussing on scoping out these opportunities and setting in motion a plan to bring them to life in the coming months.
I’m sure you’re all eager to know when we’ll be appointing a new permanent General Manager – our recruitment process is well underway, and our CEO looks forward to introducing the new appointment in the near future.
We’re also working on a special partner offer that will give you access to discounted Public Trust products – keep an eye out for the offer coming your way soon.
In this issue, we’re shining the spotlight on our thematic reviews as an integral piece of our proactive supervision work – and chatting to a couple of key people from our CTS team, Mark Lawrence, Head of Custody, and Elena Vinton, Head of Client Services in Auckland. Enjoy!
Ngā mihi David Callanan Interim GM Corporate Trustee Services
Thematic Reviews: Know better, do better
We’re taking a deep-dive into thematic reviews, a core offering of our proactive supervision activities. Read on to understand how the review process works, and how they can add value to the way you work.
In 2020, our CTS team introduced a revised thematic review framework. Thematic reviews form part of our proactive supervision activities and are high-level, broad reviews performed for our supervised clients, on a particular area of focus, or theme. The review process is a light investment of a client’s time, comprised of simple and easy surveying rather than intensive monitoring visits and deep analysis – yet, the results are clear, impactful and useful.
Since the revised framework was introduced, the CTS team have completed reviews on areas such as cybersecurity, unit pricing, valuation, compliance assurance programmes, investment performance and fund fee processes. The team carefully selects the themes for review during our annual supervision planning, basing them on their analysis of the market and regulatory environment.
The purpose of undertaking thematic reviews is to support our customers by:
Gathering insights as to where a supervised entity sits in comparison to their peers in the selected area or theme;
Understanding whether the industry is in line with best practice;
Understanding key manager activities, or processes, without having to perform in-depth deep-dive reviews;
Providing a risk assessment of key manager activities or processes, with the intention of conducting a deep-dive review of any identified high-risk areas.
The process is simple. A set of survey questions is sent to participants along with a request for any necessary supporting documentation. After the answers are collated, reviewed, and analysed, our team provide participant feedback via letter, including key recommendations, how the participant is placed against industry peers and expectations for remediating any areas for improvement.
People who have taken part in the reviews have found the process to be invaluable, particularly helping them to better understand:
Where they stand in comparison to their industry peers;
Improvements and best-practice recommendations;
Tricky areas which may not be clearly understood by the industry (for example, compliance assurance programmes);
New or recent industry regulatory insights (which Public Trust is able to provide due to its position as a frontline supervisor between the FMA and supervised entities).
Reach out to Jerry Koh or any member of the CTS Supervision team to learn more about the offering of review topics, recommendations and how they can add value to the way you work.
A thematic review in action: What does a good compliance assurance programme look like?
A thematic review performed by our team on compliance assurance programmes in 2021 shows just how simple and clear the process is – and how effective the findings and recommendations can be in shaping your processes and measuring excellence. Read on for more.
What exactly does a ‘good’ compliance assurance programme (CAP) look like? We set out to help 19 managed investment scheme (MIS) managers find out during a CAP thematic review in late 2021.
As with all Public Trust thematic reviews, this one began with a set of survey questions to find out more about each participant’s compliance programme, where risks are identified and assessed, and their compliance assurance programme, where key process controls to mitigate identified risks are tested for effectiveness.
At the close of surveying, the results were analysed by our CTS team and presented in January 2022, followed by individual responses, feedback and guidance to participants in March 2022.
Here’s what the thematic review told us:
While most MIS managers implemented a compliance programme to manage the risks of non-compliance and issuer obligations, many weren’t able to describe the process in detail.
Most managers identified cybersecurity as one of their biggest risks.
All managers reviewed their programmes at least once a year (half of them reviewed more frequently).
Compliance Assurance Programmes
All managers had a CAP in place, with more than half able to describe the process in detail.
Only half of those who participated reviewed the control design (a handful didn’t have any detailed testing documentation).
All participants review their CAP at least once a year.
Everyone agreed that CAP adds value on risk and assurance – half of the participants said it helps to measure excellence and improve processes.
Oversight and Governance
Except for one, all participants identified the Board or a specific committee as responsible for managing the risks and overseeing compliance with their licensed issuer obligation.
The form and contents of CAP reporting varied significantly between participants, with some participants noting it as only a compliance activity, rather than a means of ensuring compliance of issuer obligations.
The insights allowed Public Trust to make several recommendations to participants to improve compliance programmes, CAPs, oversight and governance. Our top recommendations across the board included:
MIS managers should apply an ‘investor lens’ when designing their compliance programme, adopting a structured and systemic approach to identifying key issuer obligation non-compliance risks.
More detail and documentation in the design of CAPs was needed, including clear guidelines on testing frequency and sampling.
CAPs should be shared with Boards for review and approval – they should further be updated regularly through reports on the compliance programme and CAP initiatives.
The insights from the review helped MIS managers better understand their own practices in relation to the industry, and against best-practice guidelines. However, it was the recommendations and subsequent engagement that provided most value, allowing participants to review their processes and re-shape them to ensure greater compliance with meeting their MIS license obligations.
Get to know the team
A quick kōrero with two of the CTS management team, Elena Vinton and Mark Lawrence.
Elena Vinton, Head of Client Services, Auckland
How long have you been at Public Trust? I have been with Public Trust for nearly seven years.
What’s your proudest moment in your time at Public Trust? My proudest moment was when findings from a monitoring visit (with a supervised entity) were presented to their Board and subsequently approved for implementation. I get a lot of satisfaction from making impactful recommendations, and work that benefits all New Zealand investors.
What’s the most important thing you want to nail in FY23 for your clients? I want to provide more training and education as an additional value-add from the CTS team.
Share your secret skill… Holiday planning. I spend a lot of time researching destinations, activities and dining options and then prepare a spreadsheet each time we go on holiday as a family!
Mark Lawrence, Head of Custody
How long have you been at Public Trust? I have been just over three years with Public Trust in a role that initially started as a contract to get our Custody business as best of breed.
What’s your proudest moment in your time at Public Trust? Introducing NAVOne and SWIFT into the Custody business and removing manual spreadsheets!
What’s the most important thing you want to nail in FY23 for your clients? I want to ensure we continue to advance technologically to allow us to support our clients’ growth and ultimately benefit all New Zealand investors.
Share your secret skill… I love to cook and experiment with ingredients - I make some wonderful dishes (according to my family and friends at least!).
Just wondering…about death, money & the future?
Money Week Webinar – Monday 8 August 2022, 2 p.m.
Public Trust, in partnership with Te Ara Ahunga Ora Retirement Commission, is delighted to be hosting a panel of experts for a very special Money Week webinar.
We’ll discuss the very important, but often uncomfortable questions we struggle to ask about our financial wellbeing.
Why do only 50% of us have a will? Why would I need an enduring power of attorney (EPA)? When and how should I bring up these topics with my loved ones? Why do so many of us feel so ill-prepared for retirement? She’ll be right, eh?...
To answer these tricky questions, BusinessDesk Investments editor Frances Cook will be joined by Public Trust CEO, Glenys Talivai, AUT senior lecturer Dr Ayesha Scott, and personal finance lead at sorted.org.nz, Tom Hartmann for a virtual kōrero on Monday 8 August to help us kick off Money Week 2022. Join them to find out how you can lean into the conversation.