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A corporate action is an event initiated by a company that affects the shareholders or shares of that company. Corporate action notifications are sent either directly or via the Financial Adviser or Authorised Representative, and the shareholder will choose if they wish to participate in the event. Participating in a corporate action can involve the option to buy or sell shares in the company at a discount to the market. However, there is always market risk and in the medium to long term this may lead to a financial gain or a loss.
A wrap account (or platform) is an administration service that offers a range of investments, including shares, through a single account. They’re offered as either superannuation, pensions or investor-directed portfolio service accounts (non-super investments). Shares can be offered through a wrap account on a non-custodial basis (i.e. directly held by the customer) or on a custodial basis (i.e. where the platform operator holds the shares for the customer).
Wrap platforms are typically designed with the Financial Adviser as the nominated representative of the customer. As such, it is the Financial Adviser that typically receives corporate action notifications from the platform. In certain circumstances, the Financial Adviser may be responsible for:
In completing our review, we required evidence that these notifications were communicated to customers, and in some cases, were unable to locate a level of evidence that confirmed this, or we deemed it impractical to search for this evidence. Our outcome is in no way a reflection of the adviser’s actions in communicating the notification, rather that we did not find the evidence we were looking for to confirm this.
The appendix in your letter lists all the corporate actions we believe may have been required to be notified to you for the respective wrap account. The listed corporate actions are those that we could not find sufficient evidence, or we have deemed it impractical to search for, evidence that the notification(s) were communicated to you by your Financial Adviser and/or Authorised Representative where they were required to do so. If you held more than one account and there are missed notifications that were required to be communicated to you for those accounts, we will write to you separately.
The timing of letters will vary depending on the platform which held your account and a letter will only be sent if we have been unable to locate, or have deemed it impractical to search for evidence, that corporate action notifications were communicated for the respective account. We expect to have communicated about the majority of impacted accounts within the coming months.
We have reviewed each missed corporate action where a notification was required to be sent and have only made a payment if the terms offered in that corporate action may have enabled a customer to benefit from a financial gain, without materially increasing their market risk. Where we have determined no financial gain would have been made, no compensation is due for that corporate action.
When completing our review and compensation calculations, there may be unknowns that we have needed to assume. These assumptions are beneficial to the customer. Examples of these include:
The payment method will vary depending on the product type. Your outcome letter details how the payment has been or will be made.
The payment is calculated using a number of factors, including the terms offered by the corporate action, your existing shareholding, and the prevailing market price. Please view our worked examples of how we calculated compensation or contact our customer contact centre if you would like more information.
Interest has been calculated using the RBA cash rate of return + 6% per annum compounded monthly up to at least the date of the letter.
The amount outlined in the letter we sent you may be different from the amount you received in your superannuation or pension account, as your superannuation fund trustee would have made deductions, such as tax and other fees, where they’re required or entitled to do so. Please contact your superannuation trustee for more information.
As it is your superannuation fund that may have suffered the loss, we are compensating the super fund for any such loss. It is also appropriate that the payment have the tax treatment and comply with the release requirements that apply to funds in your superannuation/pension account. As stated in the letter, the payment has been paid directly to the Trustee of the Platform account, who will then credit the payment to you within 60 days.