ASIC Managed Accounts Project - IMAP Regulatory Group update

The IMAP Regulatory Group was formed in September 2018. A key reason for the formation of the group was to ensure that the broad managed account community was well represented in issues that specifically affect providing and advising on managed accounts.


In ASIC’s Corporate Plan 2018 - 2022, ASIC announced it is initiating a new project on Managed Accounts.

ASIC have noticed the significant growth and expect this to continue and that Managed Accounts will be part of mainstream financial services.

The project commences with a research and engagement phase; the scope of the project will be broad and encompass platforms, managed account issuers and advisers including SMAs, MDAs and IDPS.
They have commissioned a research survey of advisers along with a benchmarking study into managed account functionality of major platforms.

Several platforms with managed accounts will be asked to provide information relating to the types of structure, fees, risks and conflicts of interest and how these are managed and other relevant matters.
Next year another group comprising advice AFSLs and advisers will be approached by ASIC to gain insight into the development of advice relating managed accounts with a similarly broad sweep of items reviewed. ASIC will also ask for client files that illustrate live examples.

ASIC have 3 objectives in the initiative;

 

  1. This surveillance may identify actual harms or concerns - in which case ASIC will take action.
     
  2. It will enable them to raise awareness of potential harms or concerns.
  3. It will provide the basis of a high level review of the regulatory framework for all types of Managed Accounts including an industry consultation process.
     
  4. IMAP will liaise closely with ASIC during the project to ensure we support their efforts to gain a clear understanding of the operations, risks and benefits of managed accounts and continue to represent the interests of managed account professionals.

The IMAP Regulatory Group

Since establishment, the Regulatory Group has been working through a number of other issues that affect IMAP subscribers.

MDA documentation
Over the course of the previous 12 months we had flagged problematic drafting in the MDA Legislative Instrument and RG179 resulting in duplicated disclosures and difficulties in ensuring that disclosures are “clear, concise & effective”.
Along with a number of MDA Providers, IMAP Regulatory Group held consultation in person at ASIC Sydney offices in October and discussed these problems and some the resulting workarounds required.
A review of documentation by ASIC will be included in the larger Managed Accounts project (see above).

Royal Commission
The Royal Commission Interim Report was published in early October and flagged a substantial number of potential policy considerations. There were no specific references to any type of managed account but report proposed a large number of questions with relevance to SMAs, MDAs and other types.

IMAP, through the Regulatory Group wrote a response focusing on those questions that affect managed account professionals, particularly the management of Conflicts of Interest, Vertical Integration and the need for structural industry change. As we now wait for the publication of the Final Report on Feb 1 the Regulatory Group has been discussing the likely impacts for Managed Accounts in Australia. For a copy of the IMAP submission click here.

Other Matters
RG97 (Disclosing Fees and Costs). A consultation paper will be issued in January which will have an impact on all investment products, including managed account providers of all types.
Timetable for NTA requriements for MDA providers will now be set back given the timetable of the surveillance project.
 
If anyone has any questions please contact IMAP or members of the Regulatory Group individually:

This email address is being protected from spambots. You need JavaScript enabled to view it.
This email address is being protected from spambots. You need JavaScript enabled to view it.
Mark Oliver - Macquarie
Jesse Vermiglio - Holley Nethercote
Claire Wivell Plater - The Fold
Bala Shastri - Praemium
Stewart Chandler - AFSL Compliance

Contact us

Email
This email address is being protected from spambots. You need JavaScript enabled to view it.

 

 

Address
Level 2, 22 Pitt Street Sydney NSW 2000