Funds Update – 6 October 2023

In this Funds Update for 6 October 2023:

1. ASIC calls on AFSL holders to strengthen their remediation procedures
2. MIS Review consultation closes
3. ASIC reissues Regulatory Guide 249 re derivative trade repositories
4. Victorian tax changes for real estate and infrastructure funds

ASIC calls on AFSL holders to strengthen their remediation procedures

On 25 September 2023, ASIC published a media release calling on Australian financial services licensees (AFSL holders) to ensure they remediate affected customers quickly and fairly, in line with ASIC’s guidance in Regulatory Guide 277 – Consumer remediation (RG 277), following ASIC’s review of the remediation policies and procedures of various large financial institutions to assess their implementation of RG 277.

The key findings of the review include:

1. Remediation review periods: some remediation policies applied unnecessary approval processes for the purposes of extending review periods.
2. Use of ‘beneficial assumptions’: AFSL holders did not always consider beneficial assumptions as a mechanism to address knowledge gaps and increase the timeliness of remediations.
3. Foregone returns of interest: some AFSL holders had pre-determined rates for calculating foregone returns or interest for specific products or scenarios. It was not always clear that these rates were subject to adequate reviews and controls to ensure that they were appropriate in the circumstances.
4. Reasonable endeavours: prescriptive approaches in relation to contacting and paying affected consumers, such as a predefined number of contact attempts, may be insufficient in certain circumstances.
5. Low value payment threshold: some policies could result in some cohorts of customers not receiving payments under $5 (which is inconsistent with RG 277).
6. Oversight and controls: a general lack of focus on the concept of fairness in governance frameworks.

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MIS Review consultation closes

The consultation period for Treasury’s Consultation Paper on its review of the regulatory framework for managed investment schemes closed on 29 September 2023.

The HSF submission is available here.

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ASIC reissues Regulatory Guide 249 re derivative trade repositories

On 3 October 2023, ASIC reissued Regulatory Guide 249 – Derivative trade repositories (RG 249) to reflect the ASIC Derivative Trade Repository Rules 2023, which commenced on 1 October 2023 and replaced the ASIC Derivative Trade Repository Rules 2013. This follows ASIC’s consultation paper CP 370 - Proposed remake of the ASIC Derivative Trade Repository Rules 2013 in June 2023.

The reissued RG 249 provides guidance on:

1. when an entity requires an Australian derivative repository licence, and how to apply for one;
2. the information you are required to submit with your application; and
3. what to do after being granted a licence.

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Victorian tax changes for real estate and infrastructure funds

On 4 October, the State Taxation Acts and Other Acts Amendment Bill 2023 was introduced to the Victorian Legislative Assembly. The bill proposes numerous changes to Victorian state taxes which have implications for real estate and infrastructure funds in particular.

For more information please read the article published by our stamp duty and tax team, available  here.

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