Regulatory reviews on top of agenda - IMAP Regulatory Group

By Jayson Forrest - Managing Editor  - IMAP Perspectives

Jenny Mulders – the Convenor of the IMAP Regulatory Group - reviews the regulatory activity IMAP has been involved in, and outlines the work ahead in 2020.

The committee of the IMAP Regulatory Group is comprised of volunteer members from a range of legal and industry participants, who have a vested interest in considering the interests of IMAP members and stakeholders. We have managed to meet regularly throughout 2019 and the group is looking forward to taking on the regulatory challenges ahead in 2020.

Following is a review of the activity the group has been involved with during 2019, as well as an update on the issues that are firmly on the group’s radar in 2020.

The IMAP Regulatory Group was invited to participate in an open forum with ASIC, based on the surveillance ASIC conducted during 2019 on platform operators, SMA and MDA providers.

ASIC appeared concerned that the growth in Managed Accounts stemmed in part - or a large part - from ‘revenue replacement’ post FOFA. The following are some of the regulator’s key concerns:

• ASIC does not accept that a reason for recommending a Managed Account is to enable a practice to be more efficient, as this is not necessarily in the client’s best interest.
• High fee levels overall (generally).
• Use of related party investments as part of the portfolios.
• Cookie cutter approaches in the use of standardised advice and where there is almost universal use of a Managed Accounts across an advice business’ client base, ASIC equates some of these concerns to the practice by some advisers of automatically recommending an SMSF.
• ASIC questioned whether the degree of competence required for Managed Accounts is always evident in the investment decision-making process.

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Some of the topics the IMAP Regulatory Group is currently involved in, and will continue to review during 2020, include:

ASIC RG97 – Fees and Cost Disclosure

Representatives of the IMAP Regulatory Group will be attending the ASIC roundtable in Sydney on the 17th March 2020.

• FASEA Code of Conduct
  The group have been taking an active approach in the consultation process with FASEA, particularly around Standard 3. FASEA has confirmed that it is digesting the submissions and preparing a response.

• ASIC Design and Distribution obligations
  The group is also involved in the ASIC Design and Distribution obligations and how these obligations will impact IMAP members.

There has also been an avalanche of draft legislation that has resulted from the Hayne Royal Commission recommendations, which the IMAP Regulatory Group is considering and responding to.

The IMAP Regulatory Group is always interested in having topics flagged to us that may be of interest to IMAP members. You can contact the group by email at: contactus@imap.asn.au

Jenny Mulders is convenor of the IMAP Regulatory Group.

At the beginning of 2020, the IMAP Regulatory Group comprises of:

Jenny Mulders - QRC Consulting – Convenor
Simon Carrodus – The Fold Legal
Eylem Kamerakkas – Macquarie
Toby Potter - IMAP
Luyen Tan - Praemium
Jesse Vermiglio - Holley Nethercote