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Policy on Platforms: Update to Regulatory Guide 148–Regulation Impact Statement–Australian Securities and Investments Commission

On 28 June 2013, the Australian Securities and Investments Commission (ASIC) released updated guidance on financial resource, corporate governance, and disclosure and dispute resolution requirements for investment platform operators. Platforms are typically used to facilitate the acquisition and holding of assets by enabling investors to bundle product features such as custody of assets, execution and consolidated reporting. Investor directed portfolio services (IDPSs) and IDPS-like schemes are types of platforms. ASIC has assessed that changes to the platforms sector since the introduction of the original guidance in 2000 has rendered aspects of this guidance no longer fit-for-purpose. Some of these industry changes have been in response to the Government’s Future of Financial Advice reforms. For example, the ban on conflicted remuneration is understood to have incentivised new forms of vertical integration (the practice of merging businesses operating at different functional levels of the market) between parties in the product distribution chain.  Consequently, ASIC decided to update its regulatory guidance. The updated guidance introduces new or revised requirements relating to investment platform operator’s financial obligations, corporate structure and disclosure. Specifically, platform operators will be required to:

  • meet equivalent financial obligations to those that apply to responsible entities;
  • be registered as a public company;
  • disclose on what basis and how they select financial products for inclusion on investment menus or in model portfolios in their IDPS Guide or Product Disclosure Statement (PDS);
  • disclose that statutory cooling-off rights are not available when consumers invest in a financial product through a platform rather than acquiring the financial product directly;
  • provide a consumer warning which discloses that withdrawal rights for financial products acquired through platforms may not be available when disclosure for those investments becomes defective; and
  • have in place a voting policy that includes information about its voting practices on company and scheme resolutions and other corporate actions, and disclose that voting policy to investors in the IDPS Guide or PDS.

New platform operators were required to comply with the revised requirements from 1 July 2013. Existing operators have been granted a transition arrangement until July 2014. A Regulation Impact Statement was prepared by ASIC and assessed as adequate by the Office of Best Practice Regulation.