LICs/LITs must adapt to new ban

Listed investment

LICAT has flagged the stamping fee ban for listed investment companies (LIC) and listed investment trust (LIT) and its impact on the industry.

The Listed Investment Company and Trust Association (LICAT) has acknowledged the significant difference the federal government’s recent ban on stamping fees relating to listed investment companies (LIC) and listed investment trusts (LIT) will make and called on the industry to adapt effectively to the change.

The new legislation, announced by the government in May and taking effect on 1 July, has been designed to improve consumer protection and clarify the regulatory framework regarding these types of investments for stockbrokers, financial advisers and fund managers.

According to LICAT, the legal amendment was made to align the treatment of listed investment entities with unlisted investment funds and exchange-traded funds, but had created “differential treatment” between LICs and LITs and all other Australian Securities Exchange-listed companies.

LICAT chairman Angus Gluskie said: “The LIC/LIT, stockbroking and advisory industry will be making adjustments to their processes and systems to accommodate the requirements of the new legislation.”

Gluskie highlighted the need for a “defined, transparent and efficient method” for LIC/LIT customers to receive sound financial advice and for advisers providing that service to be fairly remunerated.

He also noted the importance of remunerating arrangers and managers of share issues for the services provided in the course of an issue.

“Our industry would hope that as market conditions themselves stabilise, that a further range of LICs and LITs can be brought to market, in turn providing investors with a continued albeit gradual expansion of investment choice, as well as the benefits provided by closed-ended investment vehicles,” he added.

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