Policy Update - August #2
Review of the regulatory framework for managed investment schemes
The Treasury has issued a consultation paper to review the regulatory structure for managed investment schemes.
The paper invites feedback on various matters, including:
The suitability of wholesale client thresholds;
The effectiveness of governance and compliance frameworks;
The appropriateness of regulating schemes involving real property;
The sufficiency of investor rights protection.
Treasury also welcomes views on ways to lessen regulatory burden while upholding positive consumer outcomes.
ASIC extends transitional relief for foreign financial services providers
ASIC has extended for a further 12 months the current licensing exemptions for foreign financial services providers (FFSPs) from the requirement to hold an Australian financial services (AFS) licence when providing financial services to Australian wholesale clients.
The exemption instrument grants licensing relief to specific FFSPs offering funds management financial services to particular Australian professional investors. During this extended period, ASIC will consider applications for temporary, standard, or foreign AFS licenses from entities not eligible for the relief.
APRA releases update on policy priorities schedule for ADIs
The Australian Prudential Regulation Authority (APRA) initially published its annual update on policy priorities in February 2023. In response to overseas banking events earlier this year, APRA has reviewed its policy initiatives to expedite immediate measures to strengthen standards related to bank financial stability and adjust timelines on less pressing policy reforms.
In summary, the letter to ADIs highlights the following key ADI priorities::
Liquidity: APRA to discuss targeted changes in Prudential Standard APS 210 Liquidity, shifting comprehensive review to 2024.
Interest Rate Risk: APRA delays finalising Prudential Standard APS 117 Capital Adequacy: Interest Rate Risk to late 2023, extends scope to include smaller ADIs.
Additional Tier 1 (AT1): APRA plans Discussion Paper to enhance AT1 capital effectiveness, and potential consultation in 2024.
Capital Framework: APRA to consult on minor updates to the bank capital framework based on industry feedback.
The letter to ADIs can be found on the APRA website at APRA policy priorities: Interim update.
ASIC consults on proposals to extend its short-term credit and continuing credit contracts product intervention orders
ASIC released Consultation Paper 371 Product Intervention orders: Short-term Credit Facilities and continuing credit contracts and is seeking feedback on proposals to extend both product intervention orders.
ASIC believes that the current orders have effectively mitigated the risk of substantial harm to retail clients linked to the provision of such products coupled with high-cost services. The existing product intervention orders commenced on July 15, 2022, enhancing consumer safeguards by forbidding the offering of short-term credit and ongoing credit contracts with excessively high fees for retail clients. These orders will lapse on January 15, 2024.
