Seagrims clients who were advised to invest in Trio Capital (Trio) related funds have been hit with management fees believed to be as high as three per cent, despite having little access to their investment in the wake of fund manager's collapse.
On 7 May, Trio's acting trustee ACT Super Management (ACT Super) contacted Seagrims' affected clients with the first statement for the Seagrims Retirement Plan since Trio's collapse in 2009.
The plan, believed to be a badged version of the Trio/Astarra My Retirement Plan, was transferred to AMP in July last year.
In a copy of the letter obtained by InvestorDaily, ACT Super provided clients with the balance of their account for the period 1 July 2010 to 30 June 2011 as well as details of adviser service fees and other management costs, believed to be around 1.1 per cent and up to 3 per cent respectively.
The letter also contained information from ACT Super that said the periodic statement is "system generated" and does not reflect the client's "actual components".
"The component information transferred to AMP [the client's new superannuation arrangements] was your calculated component breakdown based on your entitlements to unimpaired assets," the letter said.
"Your component breakdown will be adjusted for future transfers to AMP (or your new superannuation arrangement)."
Unimpaired assets are assets not linked to the Astarra Strategic Fund (ASF), Ualan Property Holdings (Ualan) and Millhouse Private Equity Trusts (Millhouse), the letter said.
As well as details of the periodic statement, the letter included six pages of answers to frequently asked questions regarding Trio.
Of the 16 questions, a number related to client concerns regarding the high level of fees charged, and in particular why the acting trustee's costs are higher than when Trio was trustee of the funds.
"The costs of the acting trustee are higher than [Trio's] fees given that the acting trustee has undertaken a range of activities that were not required to be performed by the former trustee," the letter said.
The acting trustee said the activities included those in addition to "normal trustee obligations", including reviewing and investing the funds' assets and managing the impaired assets.
It also included conducting the successor fund transfer process (SFT); executing the transfer of members' entitlements to AMP under the SFT; and preparing and lodging the government financial assistance under Part 23 of the Corporations Act and managing the payment of the grant of financial assistance to members.
ACT Super Mike Hill told InvestorDaily select costs relating to the acting trusteeship have been included in the government's $55 million compensation package, meaning clients will be reimbursed for the management costs occurred by the acting trustee.
Hill was not able to make any comment in regards to the adviser service fees.
Commenting on the issues of fees, Seagrims director Peter Seagrim told InvestorDaily: "Seagrims Pty Ltd has not received any services fees from ACT since June 2011."
In regards to the status of the impaired Trio assets, ACT Super said work continues in regards to the AFS and Ualan assets while recovery from the Millhouse investments will take "some months or possibly years to achieve."
"The values of the impaired asset have been reduced to zero in members' accounts given the inherent uncertainty as to their value and whether any monies will be recovered by the funds," the letter said.
ACT Super continues to liaise with the Trio's responsible entity Trust Company (Trust) in relation to the remaining funds held within the numerous managed investment schemes (MIS) for which it become the responsible entity.
"Trust is currently in the process of winding up those MISs that had no exposure to the ASF," the letter said.
"ACT Super expects to transfer members' entitlements to the final distribution to AMP or, for those members who have closed their AMP account, to their new superannuation arrangements, within two months.
"In respect of the three MISs with exposure to ASF, it has been agreed with Trust to effectively distribute the remaining funds to members but to keep the funds open with small cash balances to the extent that opportunities arise for the RE to pursue recovery actions against third parties for the losses sustained by those funds."
Seagrims transferred 972 clients with funds totalling about $105 million into financial products issued by Astarra Capital Ltd, now called Trio, between September 2008 and October 2009, an ASIC statement said.
