We continue to add new features and re-arrange others on our website as the world continues to change arrange us. Nothing stands still these days and we are continuing to learn and observe the changes in the global risk management profession as they impact on the business community.
The attached brochures this month include a brochure from:
(i) the Australian Small Business and Family Enterprise Ombudsman focusing on seeking help if you are having financial issues;
(ii) Barry Urquhart on "Aiming to be non-competitive" which is an interesting concept on the importance of ownership of your own business:
(iii) Credit Matters for tradies which may be of value for those tradespeople who are about to go in to business;
(iv) an introduction to CreditorWatch; and
(v) on "What is bugging you" which is all about the power of knowledge.
Don't forget, if you wish to promote your business services at an affordable rate, you can contact Kim at firstname.lastname@example.org. You will be pleasantly surprised at what we have to offer.
Lawrence Garfield: I love money. I love money more than the things it can buy. There's only one thing I love more than money. You know what that is? OTHER PEOPLE'S MONEY.
Lawrence Garfield was right, there is nothing better than other people’s money. In fact, business is all about getting hold of other people’s money through sales. That is the very basis of commerce.
There are many ways we can get other people’s money in business, and mostly it is via a respectable relationship between buyers and sellers. On occasions, credit will be extended by the supplier to the buyer to encourage extra sales. When the credit relationship is respected, suppliers are paid within terms and both parties are in a win-win relationship.
Over the years however, it has been found that not all buyers are respectful of the rights of the seller and so do not pay back their debts. At times, when circumstances warrant and because of unforeseen circumstances, the buyer’s unpaid debt has been forgiven.
In today’s environment however, it is increasingly obvious that many buyers do not respect their responsibilities to repay their debt or the right of the supplier to be paid when credit is extended.
To some extent, this is the fault of everybody in the business environment whose actions or inactions, have encouraged debtors in the belief that they do not have to repay their debts. Debtors now all too frequently get to keep other people’s money by illegal strategies, lies, or because they can without serious penalty.
As a result, when dealing with consumers, most commercial credit providers will no longer extend credit to consumers. Consumers now must pay upfront for goods or services, whether that be from existing funds or those provided by consumer credit providers. We also note this situation is happening more often in the commercial or B2B environment, where certain industries no longer extent credit to other businesses.
The problem for a business, which extends credit is that often people with little intention of paying it back, are already enjoying your money. In tough times, and it looks like they will get worse, many more people will target a business that extends credit. As criminologists point out, in good times people steal because they can, and in bad times, they steal to survive. As the times get tougher, those people with no intentions of paying their debts or your invoices, know they can enjoy other people’s money with little chance of having to pay it back.
The problem for those that always focus on cheap business prices, costs, or options, is that they rarely focus on value for money or peace of mind factors. I understand that for some people, the cheapest business input is the most important factor for them. The main issue however, is whether this policy is also the best one for their business?
I understand that not all business people have access to unlimited funds to operate their business, an issue I have come across operating my own businesses. However, I have always used the best products and services I could afford as my businesses developed.
When business people face the mantras of, there is always a “cheaper” way to operate, or you need “…to cut costs” there are problems which are not explained. Afterall, these mantras rarely explain the ramifications of operating cheaper rather than effectively, or which costs can be cut, or should not be cut.
In following these mantras, it is also wise to consider the ramifications of your decisions and whether your business will actually be better off overall. After all, many business people do not realise that when you change a business process there will always be unforeseen ramifications which may have not been anticipated.
For instance, a good example is where you decide to employ inexperienced employees, or those willing to work for less. Inevitably, these employees are going to make more mistakes than experienced and committed employees. As a result, it is important to know whether the costs of increased mistakes that cost additional dollars to rectify, or the loss of sales because of the extra mistakes, have been factored into the decision? My experience is that they are rarely allowed for and therefore cause all sorts of future problems.
The answer as to whether cheaper business inputs are more expensive for a business, or add further value over the long term, will always be debatable. The answer really depends on management’s values and whether a cheap price upfront is more important than operational effectiveness and peace of mind over the long term.
The experienced business person, risk management professional, or credit manager have learnt over time that their tummy rumblings are a vital part of their decision making. On reviewing any new business proposal or credit application, or an extension to an existing credit agreement, when their tummy rumbles, they know something is not right.
I know it doesn’t sound very professional or scientific, but our tummy rumblings reflect things we do not always ’see’ at first. We have therefore learnt over time not to discount these rumblings. Rather, we take the time to reflect on why things don’t look right.
When we review new or changes to existing trading agreements, mostly we “know” straight away if we are going to approve the application, reject it, or ask for additional information. At other times, when our tummy rumbles, we have taken a step back and taken the time to think through the information provided. Inevitably when we take these actions, the right answer comes to us.
Is the spelling ANZAC, Anzac, or anzac?
The word ANZAC is an acronym for the Australian and New Zealand Army Corps. An acronym expectedly consists of the capitals for each word. Interestingly, we also have Anzac, which has an initial capital to refer to people, places, or other uses, other than the specific Corps. For example Anzac Day, Anzac biscuits and the Anzacs.
Spelling the word anzac using only lower case is a spelling error.
Interestingly, in Microsoft Word if you misspell ANZAC, the capitalised version will not be suggested, but only the version with the initial capital. In fact Microsoft Word will even autocorrect a misspelled capitalised variation of ANZAC, to be the word Anzac, with the initial capital letter.
Updates courtesy of www.asic.gov.au
01 November 2019
ASIC has commenced action in the Federal Court in South Australia focused on the promotion of the MobiSuper Fund, a division of the Tidswell Master Superannuation Plan (Fund). The action is against:
•Tidswell Financial Services Ltd (Tidswell), an Australian financial services (AFS) licensee and superannuation trustee;
•MobiSuper Pty Limited (Mobi), the promoter of the MobiSuper Fund;
•Mobi’s AFS licensee ZIB Financial Pty Limited (ZIB); and
•Andrew Richard Grover, a director of Mobi and ZIB.
ASIC is concerned about potential harm to consumers if professional superannuation trustees fail to adequately monitor the activities of their promoters. Trustees have responsibilities in relation to the actions of their promoters.
08 November 2019
ASIC has cancelled the Australian financial services (AFS) licence of Warrnambool-based responsible entity, Southern Mortgages Ltd (SML), for failure to comply with financial services laws.
The licence cancellation was effective from 24 September 2019.
SML’s sole managed investment scheme, Southern Mortgage Fund ARSN 090 928 448 (the Scheme), commenced winding up in August 2014. As at the date of the licence cancellation, the Scheme is still being wound up.
SML had not complied with a number of important financial services laws over a significant period of time. It did not maintain sufficient financial resources. It failed to lodge its financial statements and audit reports for consecutive years since 30 June 2015.
SML had not complied with its obligation to hold membership of a dispute resolution system.
‘A responsible entity must carry out their duties with reasonable care and diligence. This includes actively monitoring each scheme and, where necessary, winding up a scheme that is no longer viable in a timely manner.
13 November 2019
Former pre-insolvency adviser John Narramore has been sentenced to four and a half years in prison, with a non-parole period of 20 months, at Brisbane District Court. Mr Narramore previously pleaded guilty to one charge of dealing in the proceeds of crime.
In October 2014, Mr Narramore, along with Stephen O’Neill of SME’s R Us, advised Richard Ludwig, a former director of Cap Coast Telecoms Pty Ltd, to engage in activity that would involve the illegal removal of company assets to prevent creditors from having access to these assets (19-047MR).
Messrs Narramore and O’Neill issued fictitious invoices from companies under their control to Cap Coast Telecoms and arranged for $743,050 to be transferred from Cap Coast Telecoms bank accounts to the bank accounts of companies under their control. Messrs Narramore and O’Neill then transferred the funds to Ludwig or his associates.
Once funds had been transferred by Messrs Narramore and O’Neill, Cap Coast Telecoms was wound up on 19 January 2019. At the time, it owed creditors $2,955,128.
In delivering the sentence, Judge Everson found that Mr Narramore’s conduct was a serious example of money laundering, a sophisticated scheme, involving a significant amount of money and motivated by financial gain.
Following sentencing, ASIC Commissioner John Price emphasised ASIC’s commitment to ensuring creditors have access to company assets during insolvency proceedings.
‘ASIC condemns any money laundering by individuals. When a company is about to be wound up, creditors should be entitled to access the assets as a means to being paid what is owed to them.’ said Commissioner Price.
The matter was prosecuted by the Commonwealth Director of Public Prosecutions.
13 November 2019
ASIC has provided guidance to assist companies meet their obligation to have a whistleblower policy.
As part of the corporate sector whistleblower reforms, public companies, large proprietary companies, and proprietary companies that are trustees of registrable superannuation entities must have a whistleblower policy available to their officers and employees by 1 January 2020.
Regulatory Guide 270 Whistleblower policies (RG 270) helps these companies establish policies that support and protect whistleblowers.
RG 270 sets out the components that a whistleblower policy must include to comply with the law. These include:
•types of matters covered by a policy
•who can make and receive a disclosure
•how to make a disclosure
•legal and practical protections for disclosers
•investigating a disclosure
•ensuring fair treatment of individuals mentioned in a disclosure.
RG 270 also provides good practice guidance to assist companies develop and implement policies that are tailored to their operations.
15 November 2019
ASIC has disqualified Ms Joanne Jennifer Pellew (also known as Pellew-Hajinoor), of Ascot, WA, from managing companies for five years.
Ms Pellew was disqualified after liquidators were appointed to various training and labour hire companies operated by Ms Pellew, namely Ochre Training (WA) Pty Ltd ACN 159 577 509 (OTWA), Ochre Training Pty Ltd ACN 154 675 242 (OT) and Ochre Workforce Solutions Pty Ltd ACN 625 510 161, and Ms Pellew’s management of the companies was found to be a contributing factor in the companies’ collapse.
ASIC found that Ms Pellew had:
•failed to exercise her duties as a director with due care and diligence;
•improperly used her corporate position to gain an advantage for herself;
•failed to prevent the companies from trading whilst potentially insolvent;
•failed to ensure that proper financial records were kept;
•failed to ensure that the companies paid all relevant taxes; and
•enabled conduct that showed evidence of illegal phoenix activity.
The total amount of debts owed by the companies to creditors exceeded $4.5 million.
In making its decision to disqualify Ms Pellew, ASIC relied on supplementary reports lodged by the liquidators of OT and OTWA, outlining possible offences. Funding from the Assetless Administration Fund was provided to the liquidator of OTWA to assist in preparing a supplementary report.
Ms Pellew is disqualified from managing companies until 27 October 2024.
15 November 2019
Keith John Lemon of The Entrance, NSW, has been disqualified by ASIC from managing companies for the maximum period of five years.
Mr Lemon was disqualified for his role in the failure of a number of companies, including Risett Pty Ltd ACN 128080179, Extreme Mechanical Services Pty Ltd ACN 153862081and PPW Engineering Pty Ltd ACN 122987035.
ASIC found that Mr Lemon:
•improperly used his position as a director;
•failed to prevent a company from trading whilst insolvent;
•failed to exercise his powers and discharge his duties with due care and diligence by continuing to accrue taxation liabilities;
•demonstrated poor compliance by failing to lodge Business Activity Statements and income tax returns;
•failed to submit a Report as to Affairs to a liquidator or to provide company books to a liquidator; and
•failed to keep adequate written financial records.
The companies collapsed owing fourteen creditors a total of $11,006,481.
In making the decision to disqualify Mr Lemon, ASIC relied on reports of possible offences lodged by liquidators of the failed companies. In particular, the liquidators of Risett Pty Ltd and Extreme Mechanical Services Pty Ltd received funding from the Assetless Administration Fund to prepare supplementary reports.
Mr Lemon is disqualified from managing companies from 6 November 2019 to 5 November 2024.
06 November 2019
The Fintel Alliance, an AUSTRAC initiative, has today revealed its major operational results for 2018-19 in the fight against serious and organised crime.
The Fintel Alliance, is AUSTRAC’s public-private partnership that combines the expertise and skills of federal and state government intelligence and law enforcement agencies and private sector businesses to protect the Australian financial system and community from criminal abuse.
Over the past year the key achievements include:
•contributing intelligence to national taskforces, leading to the arrests of 9 of Australia’s Most Wanted criminals and a 380% increase in reports on operations of outlaw motorcycle gangs
•saving 2,500 people from credit card fraud and identify theft, with a further 87 potential victims identified or protected across all operations
•dismantling significant fraud networks and National Disability Insurance Scheme (NDIS) fraud
•detecting suspicious activities relating to child sexual exploitation by an increase of 580%
•issuing 131 intelligence products to law enforcement and intelligence agencies
•contributing to the arrest of 108 persons of interest and closure of the accounts of over 90 high-risk customers, and
•providing vital intelligence for ongoing cybercrime, cyber scams and virtual currency money laundering operations.
AUSTRAC CEO Nicole Rose PSM, said the financial intelligence and information shared through the Fintel Alliance is critical in helping AUSTRAC and its government partners identify, disrupt and dismantle criminal networks that prey on the most vulnerable.
“It is very encouraging to see the Fintel Alliance already making major contributions to fighting serious financial crime after its first two years in operation,” said Ms Rose.
“I commend the efforts of Fintel Alliance industry and government partners and their willingness to collaborate in this fight.
“The government’s increased funding of $28.4 million to AUSTRAC over the next four years will allow the Fintel Alliance to expand its capabilities to better combat serious financial crime,” said Ms Rose.
Fintel Alliance Strategic Advisory Board Chair, Roger Wilkins AO applauded the commitment of all organisations and staff involved.
"The Fintel Alliance is building a partnership, or coalition, between public sector law enforcement and policy agencies, and private sector financial organisations to prevent and disrupt the flow of illicit funds,” said Mr Wilkins.
New indicators report on combatting child sexual exploitation
As part of the operational results announced today, AUSTRAC has also published a joint industry and government financial indicators report to combat child sexual exploitation.
The report, developed through the Fintel Alliance, will help the financial services industry and law enforcement identify financial activity that may be related to child exploitation activities.
Download the reports
•Fintel Alliance annual report 2018-19 (PDF, 3.9MB)
•Fintel Alliance combating the sexual exploitation of children for financial gain activity indicators report (PDF, 218KB)
12 November 2019
Detectives from the E-Crime Squad have arrested a man today as part of an investigation into unregistered cryptocurrency transactions.
The 38-year-old Cairnlea man was arrested at his home address in Cairnlea.
He is currently being interviewed in relation to two Commonwealth offences:
•Section 76A(5) of the Anti-Money Laundering and Counter –Terrorism Financing Act 2006 (Cth): Having provided a registrable Digital Currency Exchange (DCE) service when not registered; and continuing to provide a registrable DCE service following AUSTRAC's Cease and Desist notice of 1 November 2018; and
•Section 400.9 of the Criminal Code Act 1995 (Cth): Dealing with property reasonably suspected of being proceeds of crime.
Police seized a substantial quantity of cash and false identification documents during the warrants, which were executed from just after 7am.
Detectives also seized a cryptocurrency ATM from a shopping centre in Braybrook today as part of the investigation.
The investigation commenced in June this year after AUSTRAC provided intelligence regarding reports of scam activity linked to the ATM, which led to police examining a number of transactions on the machine.
Victoria Police worked in cooperation with AUSTRAC during this investigation, which is one of the first by the E-Crime Squad relating to cryptocurrency transactions.
AUSTRAC’s acting National Manager Intelligence Operations David Hawkins said this outcome demonstrates the importance of close collaboration between AUSTRAC and our law enforcement partners in stopping financial crime.
01 November 2019
Four furniture retailers have each paid a penalty of $12,600 after the ACCC issued them with an infringement notice following an ACCC investigation into the industry’s use of ‘was/now’ price comparisons in advertising.
Plush – Think Sofas Pty Ltd (Plush); Koala & Tree Pty Ltd (trading as Koala Living); ESR Group Holdings Pty Ltd (trading as Early Settler); and Oz Design Furniture Pty Ltd each received an infringement notice.
The ACCC had reasonable grounds to believe each retailer had made false or misleading representations by claiming that consumers would save money if they purchased certain furniture items when this was not the case.
The retailers used advertising statements such as ‘was $2599, now $2049’, or ‘$799, save $200’, when the furniture item had never been advertised at the ‘was’ price, or was only advertised at the ‘was’ price for a short period of time.
For example, one of the retailers advertised a ‘Roller Ottoman’ at a price of $539 with the words ‘save $360’, even though it was available for $449 directly before the sale, while another advertised an occasional chair with the words ‘$799, save $200’, when its usual price for the previous six-months was $699, $100 cheaper than the sale price.
“Consumers rely on comparative pricing to find the best deal available. If there are no genuine savings, businesses are misleading consumers," ACCC Commissioner Sarah Court said.
“Using claims of false savings to induce consumers to purchase products also disadvantages competing retailers which are complying with the law.”
“The ACCC has taken this enforcement action to send a strong message to retailers that they must ensure that any claimed savings are accurate and based on a “before” price which has been offered for a reasonable period when using comparison advertising,” Ms Court said.
01 November 2019
The ACCC has accepted a court-enforceable undertaking from three related video gaming companies after they acknowledged they were likely to have misled consumers about their consumer guarantee rights in relation to the online action game Fallout 76.
The companies, ZeniMax Media Inc, ZeniMax Europe Limited and ZeniMax Australia Pty Ltd (together, ZeniMax), accepted that their actions were likely to have contravened the Australian Consumer Law (ACL).
The ACCC received complaints that ZeniMax representatives told consumers that they were not entitled to a refund after they had experienced a variety of faults with the Fallout 76 game, including, in some cases, problems with the servers, lagging, graphic and visual problems.
“ZeniMax has acknowledged that they are likely to have misled certain Australian consumers about their rights to a refund when they experienced faults with their Fallout 76 game,” ACCC Commissioner Sarah Court said.
ZeniMax will offer to provide refunds to consumers who contacted them between 24 November 2018 and 1 June 2019 to request a refund and have not already received one. Consumers who accept a refund will no longer be entitled to access and play the game.
“When a consumer buys a product it comes with automatic consumer guarantees, and retailers must ensure their refunds and returns policies do not misrepresent what the Australian Consumer Law provides,” Ms Court said.
“When a consumer has purchased a product that has a fault which amounts to a major failure, the Australian Consumer Law provides them with the right to ask for their choice of either a repair, replacement or refund.”
ZeniMax has also undertaken to amend its customer service documents and scripts to address the ACCC’s concerns about misrepresentation of the consumer guarantee rights under the ACL.
ZeniMax’s undertaking is available at ZeniMax Media Inc, ZeniMax Europe Limited and ZeniMax Australia Pty Ltd.
14 November 2019
The ACCC has preliminary concerns that Assa Abloy’s proposed acquisition of E Plus Building Products Pty Ltd would significantly reduce competition in the market for fire door cores.
Assa Abloy, through its subsidiary Pyropanel, and E Plus both supply fire door cores to licensed fire door manufacturers throughout Australia.
“Our preliminary view is that the proposed acquisition raises significant competition concerns in what is an already highly concentrated market,” ACCC Commissioner Stephen Ridgeway said.
“There are only three companies who supply fire door cores to external manufacturers, outside their own vertically integrated business. Combining Pyropanel and E Plus would create a market with only two suppliers, with Assa Abloy controlling about two thirds of that market. The ACCC believes that there is a real chance that this will lead to higher prices for Australian businesses which require certified fire doors.”
The ACCC’s preliminary view is that any new supplier would be unlikely to enter the market in time, and at a sufficient scale, to prevent price increases by a combined Assa Abloy-E Plus entity.
“There are high barriers for a company to start supplying fire door cores in Australia due to the stringent testing and certification regime. Developing a range of certified products to compete with Pyropanel and E Plus is likely to be costly and time consuming, delaying new entrants,” Mr Ridgeway said.
“As Assa Abloy is now vertically integrated across all aspects of the door manufacturing business the proposed acquisition would also increase Assa Abloy’s incentives to block rival manufacturers from testing their products with Assa Abloy cores, locks, seals, and other door products.”
19 November 2019
Hai Feng International Pty Ltd, trading as Big Red Jacks Tools & Equipment (Big Red Jacks), has paid a penalty of $12,600 after the ACCC issued an infringement notice.
The ACCC issued the infringement notice because it had reasonable grounds to believe that Big Red Jacks had supplied a vehicle jack that did not comply with the Consumer Product Safety Standard for Vehicle Jacks.
The ACCC alleged that Big Red Jacks supplied a ‘Torin Big Red 4 ton double ram bottle jack’ (4 Ton Jack) which did not comply with both labelling and performance requirements for vehicle jacks because:
•the jack was not permanently and legibly marked with specified instructions regarding its operation and its working load limit; and
•the ‘overload protection’ function did not operate in some instances until the weight placed on the jack reached 8,450 kg, when its nominated capacity was 4,000 kg. Where fitted, the overload protection function must activate when the jack is subjected to a force no greater than 15 per cent of its nominated capacity (that is, between 4000 kg and 4600 kg for the 4 Ton Jack).
“Vehicle jacks that do not comply with the mandatory standard pose a very serious risk of injury or death to consumers using them,” ACCC Deputy Chair Delia Rickard said.
Many years ago, I came across a book "How not to pay your debts" by Peter Clyne.
This book is a good read if you would like to know some of the tactics which are used by crooks and fraudsters. Many of the tactics used by Mr Clyne over 50 years ago are still used today.
At just over 80 pages, it is quick and easy to read even for the busiest of people. At last viewing, it was still available for sale at Amazon and Booktopia if you are interested.
Credit Matters is a financial risk management resource centre for the Australian business community. If you are in business, Credit Matters is your ideal source of financial risk management solutions.
Credit Matters is continuing to grow and provide marketing and knowledge about financial risks to the Australia business community.
Futhermore, we invite marketing and knowledge ideas from our readers and contributors on how we can assist our respective firms grow. If you have any ideas, please contact me at email@example.com.
If you are interested in finding new ways to reach your marketplace, why not try Credit Matters. Our prices for advertising are very reasonable and advertising packages are on offer to make any cost, even more affordable. So if you are interested in reaching your customers at the right price, please contact Kim at firstname.lastname@example.org for options.