The Institute of Managed Account Professionals (IMAP) has welcomed the release by ASIC of a long foreshadowed revision of the MDA Class Order. “The new version of Regulatory Guide 179 is easy to read and a clear and pragmatic response that makes it more likely that advisers will take up MDA’s because of the flexibility they allow in the advice process” said Toby Potter, Chair of IMAP.
“ASIC have recognised that Managed Accounts are operated in many ways and the new Regulatory Guide recognises this in allowing multiple modes of operating. This reflects the IMAP submission to the consultation paper.”
Key takeouts:
No NTA for MDA Operators – now called MDA Providers
IMAP welcomed ASIC not implementing a net tangible asset requirement as discussed in the consultation paper. However – heads up – ASIC will be reviewing this over the next two years while they determine the impact of the changes in this update.
Multiple Managed Account Operating Models
ASIC signalled with the release of a consultation paper in 2013 that they recognised that market practice had moved in advance of the old regulations. MDA’s are offered with one or organisations involved, on platform or as standalone services and as PDS based schemes or under a contract . This update brings a welcome alignment of regulation and industry practice. For example, ASIC seemed uncomfortable with Limited MDAs and these are now brought into the regulatory regime.
Limited MDAs have a two year transition
A two-year window for advisers who are currently using platforms to determine their best option. ASIC indicated that they will give some consideration to the experience gained in operating a limited MDA service for those who apply to be fully fledged MDA Providers. ASIC has provided these advisers with several options including introducing a new type of MDA – MDA on a Regulated Platform – with specific reliefs but many advisers currently using a limited MDA may prefer to partner with a full MDA Provider rather than get into the full compliance regime.
Best Interest Duty and Conflicts of Interest
Further evidence of how seriously ASIC regard Best Interest duty and the treatment of conflicts of interest. This will require careful consideration by Advisers and MDA Providers.
A lot of process and document changes
Existing MDA Providers will have to review their current document set and compliance and operating processes to ensure they comply with the new regulations. One year transition window.
Investments with recourse or ongoing liability for Investors
Much tighter disclosure and operating proceduresFurther evidence of how seriously ASIC regard Best Interest duty and the treatment of conflicts of interest. This will require careful consideration by Advisers and MDA Providers.
A lot of process and document changes
Existing MDA Providers will have to review their current document set and compliance and operating processes to ensure they comply with the new regulations. One year transition window.
Investments with recourse or ongoing liability for Investors
Much tighter disclosure and operating procedures.
