ASIC sharpens focus on REs
The Australian Securities and Investments Commission (ASIC) has proposed tightening up on the responsible entity (RE) arrangements around managed investment schemes (MIS).
The regulator has issued a consultation paper in which it sought industry feedback on restricting guarantees and indemnities granted to responsible entities, requiring the REs to create rolling 12-month cash flow projections, increasing the net tangible asset capital requirements for the REs and specifying the net tangible asset liquidity requirements for REs.
Development of the ASIC consultation paper comes in the wake of the collapse of a number of agricultural investment schemes and recent judicial decisions, which have suggested inherent conflicts of interests with respect to the control of the schemes and the control of the ME.
Commenting on the discussion paper and its proposals, ASIC Commissioner Greg Medcraft pointed out that the financial requirements for REs had not been reviewed since the implementation of financial services reform in 2002.
“In producing the consultation proposals, ASIC has set out to ensure sufficient rigour in the operating risk framework that applies to businesses that seek to manage money on behalf of members,” he said.
AUTHOR
Mike Taylor
Recommended for you
ASIC has released the results of its first adviser exam to be held in 2025, with 241 candidates attempting the test.
Quarterly Wealth Data analysis has uncovered positive improvements in financial adviser numbers compared with losses in the prior corresponding period.
Holding portfolios that are too complex or personalised can be a detractor for acquirers of financial advice firms as they require too much effort to maintain post-acquisition.
As the financial advice profession continues to wait on further DBFO legislation, industry commentators have encouraged advisers to act now in driving practice efficiency.
