Comments on: Let them eat cat food! http://www.thefinancialcoach.co.za/2009/09/27/let-them-eat-cat-food/ Managing people & their emotions around money Fri, 27 Aug 2010 07:55:39 +0000 hourly 1 http://wordpress.org/?v=3.0.1 By: Gregg http://www.thefinancialcoach.co.za/2009/09/27/let-them-eat-cat-food/comment-page-1/#comment-77 Gregg Fri, 11 Dec 2009 08:30:31 +0000 http://www.thefinancialcoach.co.za/?p=317#comment-77 Hi Bruce Been thinking about writing a letter to you since you recently wrote about Ovation and "blamed" advisors for using Ovation in the first place. I guess there could be some merit in that argument, in some cases, but not in all cases. We had used Ovation for many years, in fact, since it was launched - mostly because of its independence (as it turns out this has been its thorn in the flesh). But the history of Ovation is long and initially it was owned by listed entity Trematon Investment Trust (as I am sure you are aware). When Trematon was not granted a banking license, they sold off Ovation - Metropolitan was one of its owners until it was eventually sold to Mr Yazbek who sold it to Cruikshank. We had no say in this process. You also need to remember that any retirement money that was invested via Ovation was not easily moved and as far as preservation fund money was concerned we were in fact prohibited (by law) from moving it (those restrictions re participating employers have recently been removed). So once it was in we were stuck. To move RA money is also an incredibly onerous and timeous process. When we became concerned about Ovation and its alleged involvement with Fidentia (towards the end of 2006), we wrote to the FSB asking them about the link between the 2 companies. More than a month after we wrote to them we received a written reply stating that there was no link between the 2 companies (as far as the FSB was concerned). This was eventually corrected by them when we were told that there was a 25% ownership by Fidentia. We had already started the process of moving RA money away from Ovation but unfortunately nothing was moved before the company was put into curatorship. At no stage did we use anything other than unit trust funds - we had no money in any common cents funds and none of our investors have lost any money - other than the levies that the curators have applied. We also cut our advice fees to 0% for about 8 months of the curatorship and are still not earning any advice fees on some of the funds to try to compensate our clients. We have communicated regularly with them and have written often to the Curators and also to the FSB and ASISA (I dont think I have made any friends in the process). The real stories behind this issue have still to come out (in my opinion). These include: How did the FSB grant a license to Fidentia and to Common Sense (and Ovation) if there was so much wrong (almost everyone I know knew that there was something vrot with Fidentia? What was the role of the Ovation directors? What was the role of the Ovation trustees? How did the trustees/FSB decide on Intervest - it is the same as Ovation - a privately held company? Why, if the court ruled that Fidentia et al have no claim to investors funds, did they rule that the curators could help themselves to investors funds? Why has there been so little transparency with respect to what the curators have been earning and charging for "professional" services? Why did the curators decline the offer of help from so many of the mancos'? This would have reduced the cost of the exerise significantly. Why has the FSB and ASISA taken so long to put the issue of Curatorships onto their agendas, especially in the light of the massive conflict of interest that exists with respect to curators fees and how they are levied? Our attempts to question this were met with contempt by the FSB. I guess I could go on but that's enough for now. I have no wish to pick a fight with you (or anyone else) and also want to put it on record that we have never received anything from Ovation other than the fees that were paid from our clients funds to us - no incentive trips or anything like that. That's enough for now. Gregg Hi Bruce
Been thinking about writing a letter to you since you recently wrote about Ovation and “blamed” advisors for using Ovation in the first place. I guess there could be some merit in that argument, in some cases, but not in all cases.
We had used Ovation for many years, in fact, since it was launched – mostly because of its independence (as it turns out this has been its thorn in the flesh). But the history of Ovation is long and initially it was owned by listed entity Trematon Investment Trust (as I am sure you are aware). When Trematon was not granted a banking license, they sold off Ovation – Metropolitan was one of its owners until it was eventually sold to Mr Yazbek who sold it to Cruikshank. We had no say in this process.
You also need to remember that any retirement money that was invested via Ovation was not easily moved and as far as preservation fund money was concerned we were in fact prohibited (by law) from moving it (those restrictions re participating employers have recently been removed). So once it was in we were stuck. To move RA money is also an incredibly onerous and timeous process.

When we became concerned about Ovation and its alleged involvement with Fidentia (towards the end of 2006), we wrote to the FSB asking them about the link between the 2 companies. More than a month after we wrote to them we received a written reply stating that there was no link between the 2 companies (as far as the FSB was concerned). This was eventually corrected by them when we were told that there was a 25% ownership by Fidentia. We had already started the process of moving RA money away from Ovation but unfortunately nothing was moved before the company was put into curatorship.

At no stage did we use anything other than unit trust funds – we had no money in any common cents funds and none of our investors have lost any money – other than the levies that the curators have applied. We also cut our advice fees to 0% for about 8 months of the curatorship and are still not earning any advice fees on some of the funds to try to compensate our clients. We have communicated regularly with them and have written often to the Curators and also to the FSB and ASISA (I dont think I have made any friends in the process).

The real stories behind this issue have still to come out (in my opinion). These include:
How did the FSB grant a license to Fidentia and to Common Sense (and Ovation) if there was so much wrong (almost everyone I know knew that there was something vrot with Fidentia?
What was the role of the Ovation directors?
What was the role of the Ovation trustees?
How did the trustees/FSB decide on Intervest – it is the same as Ovation – a privately held company?
Why, if the court ruled that Fidentia et al have no claim to investors funds, did they rule that the curators could help themselves to investors funds?
Why has there been so little transparency with respect to what the curators have been earning and charging for “professional” services?
Why did the curators decline the offer of help from so many of the mancos’? This would have reduced the cost of the exerise significantly.
Why has the FSB and ASISA taken so long to put the issue of Curatorships onto their agendas, especially in the light of the massive conflict of interest that exists with respect to curators fees and how they are levied? Our attempts to question this were met with contempt by the FSB.

I guess I could go on but that’s enough for now. I have no wish to pick a fight with you (or anyone else) and also want to put it on record that we have never received anything from Ovation other than the fees that were paid from our clients funds to us – no incentive trips or anything like that.

That’s enough for now.
Gregg

]]> By: Bruce Cameron http://www.thefinancialcoach.co.za/2009/09/27/let-them-eat-cat-food/comment-page-1/#comment-75 Bruce Cameron Sun, 06 Dec 2009 19:37:57 +0000 http://www.thefinancialcoach.co.za/?p=317#comment-75 A few points: 1. Personal Finance has dealt in a great deal of detail with Ovation. One of the issues that has not been settled is why financial advisers used the Ovation platform, particularly after it jumped into bed with Fidentia. And how many checked to see whether Common Cents was not a registered money market fund before giving the money of their cloients to Angue Cruikshank on a platter? I would suggest that anyone whose money was placed in Common Cents should be asked their adviser some serious questions. 2. The High Court has ruled that the Fidentia curators cannot claim any money from Ovation clients. 3. On Philip's comment: Personal Finance derives no income from the property section of the Argus. Personal Finance has dealt with estate agent commissions on a number of occasions Bruce Cameron A few points:
1. Personal Finance has dealt in a great deal of detail with Ovation. One of the issues that has not been settled is why financial advisers used the Ovation platform, particularly after it jumped into bed with Fidentia. And how many checked to see whether Common Cents was not a registered money market fund before giving the money of their cloients to Angue Cruikshank on a platter? I would suggest that anyone whose money was placed in Common Cents should be asked their adviser some serious questions.
2. The High Court has ruled that the Fidentia curators cannot claim any money from Ovation clients.
3. On Philip’s comment: Personal Finance derives no income from the property section of the Argus. Personal Finance has dealt with estate agent commissions on a number of occasions
Bruce Cameron

]]> By: Philip http://www.thefinancialcoach.co.za/2009/09/27/let-them-eat-cat-food/comment-page-1/#comment-39 Philip Tue, 06 Oct 2009 08:50:45 +0000 http://www.thefinancialcoach.co.za/?p=317#comment-39 Gregg Good blog, but I am afraid Ovation appears to be yesterdays news, I bet you would get the same reaction if it were a Fidentia issue - it appears as if the regulator is in such a mess that they cannot bring any matter with any complexity to finality. I have no faith in the FSB and much the same as Home Affairs, Eskom, SABC, CIPRO etc I think the FSB is a rotten apple waiting for a big scandal. What did work in the past was the self regulation of the UT industry by the ACI where there were committed people who struck a balance between the interests of the members and those of the investor public/ investment industry. Sadly the ASISA merger appears to be more about corporate and political power and less about the tenets which the ACI held and for that matter the route the LOA was on when Vuyani Ngalwana (sp)was caning Gerhard Joubert - the effect was that they began to get their house in order. Now sadly both the regulator and the self regulating body appear to be either in a mess or playing corporate games. As for Bruce Cameron he also picks his topics - his independence is based upon his newspaper sales and if it weren't for the property industry paying for his Sat paper he might actually take a deeper look at the estate agents comm structure. Not a pretty picture I'm afraid. Gregg

Good blog, but I am afraid Ovation appears to be yesterdays news, I bet you would get the same reaction if it were a Fidentia issue – it appears as if the regulator is in such a mess that they cannot bring any matter with any complexity to finality. I have no faith in the FSB and much the same as Home Affairs, Eskom, SABC, CIPRO etc I think the FSB is a rotten apple waiting for a big scandal.

What did work in the past was the self regulation of the UT industry by the ACI where there were committed people who struck a balance between the interests of the members and those of the investor public/ investment industry. Sadly the ASISA merger appears to be more about corporate and political power and less about the tenets which the ACI held and for that matter the route the LOA was on when Vuyani Ngalwana (sp)was caning Gerhard Joubert – the effect was that they began to get their house in order.

Now sadly both the regulator and the self regulating body appear to be either in a mess or playing corporate games.

As for Bruce Cameron he also picks his topics – his independence is based upon his newspaper sales and if it weren’t for the property industry paying for his Sat paper he might actually take a deeper look at the estate agents comm structure.

Not a pretty picture I’m afraid.

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