NTA Requirements: The NTA requirements that ASIC imposes should reflect the services that the MDA operator is authorised to provide.
MDA Experience requirements: The expertise requirements should be more closely aligned to the services which an MDA Operator provides including
Advice
Operational management
Investment management
Custody
Professional Indemnity Insurance Requirements: PI requirements should be adjusted to match the risk of the service operated by the MDA Operator
FSG: Removal of the requirement to list MDA Fees in the FSG, retaining full fee disclosure in the SOA and MDA Contract.
Fee Disclosure: Clarification that the Fee Disclosure Statement should apply only to those elements of MDA fees which relate to advice fees, where these can be identified discretely
Annual Reviews: IMAP maintains that the requirement for an annual review is excessive and would be better expressed as a two-year requirement. The requirement for annual reviews imposes a cost on the advising organisation which may be inappropriate given the nature of client relationship or size of funds under management.
Record of Advice: IMAP requests that ASIC makes it clear that a review can be undertaken through an ROA, if appropriate, rather than requiring a full SOA.
ASX Participants’ Exemption: IMAP notes that in RG166 the financial requirements proposed to be imposed on MDA Operators may not apply to ASX Participant Members. We invite ASIC to consider whether this is appropriate where the other financial services provided include MDA services. A market Participant minimum NTA requirement is $1m and is a broader definition of NTA than that proposed under the MDA regulations. A successful MDA service operated under the arrangements currently proposed by ASIC might easily require substantially more than the ASX requirements and that it be held in cash or near cash instruments.
To read IMAPs final recommendations to ASIC please click here