The Albanese government has instructed Treasury to review the regulatory framework relating to managed investment schemes (MIS).
Assistant Treasurer and Financial Services Minister Stephen Jones justified the need for the action due to the fact the regulatory parameters have not been assessed since their introduction over 20 years ago.
“The review will examine whether the regulatory framework is fit for purpose, identify potential gaps and consider what enhancements can be made to reduce undue financial risk for investors,” Jones explained when announcing the move.
The process will concentrate on whether the wholesale investor thresholds are appropriate, whether certain MIS should be sold to retail investors, whether the governance, compliance and risk management frameworks applying to responsible entities are suitable and the interaction between federal and state-based laws regulating MIS involved in property assets.
In addition, the review will consider whether an insolvency regime is needed for MIS, liquidity requirements and if the rights for individuals who invest in MIS are fitting.
“As part of the review, Treasury will consider the recommendations by various bodies, including the former Corporations and Markets Advisory Committee and the Parliamentary Joint Committee on Corporations and Financial Services,” Jones noted.
News of the review was welcomed by the Financial Services Council (FSC) chief executive Blake Briggs, who recognised it was a chance for the sector to demonstrate some important characteristics it possesses.
“The MIS review is an opportunity to demonstrate the sector is consumer focused and well regulated, while also identifying opportunities to eliminate fringe operators that damage the reputation of the broader industry and pose risks to consumers,” Briggs said.
“The FSC supports the government’s decision to emphasise the MIS review’s focus on whether the wholesale investor test is appropriate as the test and its thresholds were set in 1991 and have not been reviewed since 2011.
“The MIS review should support an effective and efficient regulatory regime which does not impede consumer choice or increase regulatory costs for fund managers that are behaving responsibly, as this would ultimately flow through to consumers, including through their superannuation savings.”
A paper inviting industry consultation will be released mid-year and the findings of the review will be presented to government in early 2024.
