ASIC has moved to require investment platform operators to explain how they choose the different products on offer to investors through their platforms.
The strengthened disclosure requirements are part of a suite of new requirements following a review of the sector, which now has around $90 billion funds under management (refer 12-49MR).
Platforms can assist retail investors to manage their investment portfolios, including through their advisers.
‘Our updated guidance moves with the times and recognises that, with consumers taking a more hands-on approach to investing, their rights must be at the forefront of platform operators’ minds,’ ASIC Commissioner Greg Tanzer said.
‘Consumers may assume that products on a platform are ultimately going to work for their benefit. ASIC wants to ensure they make confident, informed choices and are aware of platform operators’ practices.’
Further requirements include ensuring they have adequate resources to conduct their financial services businesses, having appropriate corporate structures and compliance arrangements, having additional policies like voting policies and policies when consumers do not opt in to continuing to receive advice, and improved disclosure through a consumer warning acknowledgment.
Investors will also have access to a product issuer’s internal dispute resolution system when they have concerns about investments made through platforms and product issuers agree to do so. ASIC will give further consideration to extending this requirement to cover external dispute resolution and corresponding compensation arrangements.
The revised guidance is contained in Regulatory Guide 148 Platforms that are managed investment schemes (RG 148) and accompanied by new class orders.
Background
The revised requirements apply from 1 July 2013 to Australian financial services licensees that are licensed to operate a platform from that date. Existing operators have until 1 July 2014 to comply with the requirements or can opt in earlier by providing a written notification to ASIC, together with notification on their website.
Platform operators that provide custodial functions should also be aware of revised financial requirements for custodians, released on 28 June 2013 (refer 13-154MR).
Platform operators will also need to be aware of upcoming revised guidance on arrangements for holding property and assets, which ASIC consulted on in December 2012 (refer 12-328MR). Final guidance will be released shortly.
Downloads:
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Consultation Paper 176 Review of ASIC policy on platforms: Update to RG 148 (CP 176)
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Report 351 Response to submissions on CP 176 Review of ASIC policy on platforms: Update to RG 148 (REP 351)
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Regulatory Guide 166 Licensing: Financial requirements (RG 166)
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Pro Forma 209 Australian financial services licence conditions [PF 209]
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[CO 13/760] Financial requirements for responsible entities and operators of investor directed portfolio services
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[CO 13/761] Financial requirements for custodial or depository service providers
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[CO 13/762] Investor directed portfolio services provided through a registered managed investment scheme
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[CO 13/763] Investor directed portfolio services
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[CO 13/797] Platform operators and trustees of superannuation entities using an agent to deliver a Product Disclosure Statement
For established operators:
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[SCO 02/294] Investor directed portfolio services
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[SCO 02/296] Investor directed portfolio-like services provided through a registered managed investment scheme