ASIC puts MDAs under review
Managed discretionary accounts (MDAs), which allow advisers to run a direct equities portfolios for their clients, are under review by the Australian Securities and Investments Commission (ASIC).
Consultation Paper 200 (CP200) outlines a number of proposed changes to the guidance and relief for MDAs, and is open for comments until 19 April.
In CP200, ASIC proposes to revoke the two temporary 'no action' positions which cover certain MDA arrangements and incorporate the issues into Regulatory Guide 179, which covers MDAs.
"[CP200 also proposes to] implement one of three alternative proposals which seek to ensure MDA investors are adequately informed when their MDA operator has discretion to invest in products where recourse is not limited (eg, contracts for difference)," said an ASIC statement.
The consultation paper also states that ASIC will insist on more detailed and specific upfront disclosure from MDA operators on "key issues".
Changes that have been implemented as part of the Future of Financial Advice (FOFA) reforms will also be incorporated into the regulatory guide, said ASIC.
ASIC commissioner Peter Kell said the MDA sector has "changed significantly" since the last guidance on the issue was released in 2004.
'This review will ensure that our requirements for MDA operators are up to date, address emerging risks and are consistent with our approach to other financial products and services,' Kell said.
ASIC commenced the current review in 2012 "as a result of the recent growth in the number of offerings and increased interest from financial planners as a result of the FOFA reforms," according to the ASIC statement.
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