ob体育 today announced it is reviewing its regulatory approach to platforms as part of broader efforts to promote investor confidence in the sector.
The platforms sector attracts significant funds. In the last decade the level of non-superannuation-related investment in platforms has doubled to around $100 billion of funds under management.
鈥楾he platforms sector has changed and grown considerably and continues to develop and expand,鈥� ob体育 Commissioner Peter Kell said. 鈥楾his is a trend we expect to continue with new forms of vertically integrated business models emerging. We also anticipate that more investors will seek to make direct investments without financial advice.鈥�
In response to this shift in investor behaviour, ob体育 proposes additional requirements for platform operators to enhance investor rights associated with investments made through platforms.
鈥榦b体育 is proposing that clients should be entitled to the same rights concerning their investments through those vehicles that they would have had if they had invested directly,鈥� Mr Kell said.
Mr Kell said ob体育 wanted investors to be confident and informed when making decisions to use platforms and invest through them.
鈥極ur proposals aim to strengthen operating requirements for platform operators, ensuring they have adequate resources to conduct their financial services businesses, supported by appropriate corporate structures and compliance arrangements,鈥� he said.
ob体育 also proposes to require platform operators to disclose how they select financial products for inclusion on investment menus, information that can have an influence on the investment decision of a client.
Comments on Consultation Paper 176 Review of ob体育 policy on platforms: Update to RG 148 (CP 176) are due by 20 April 2012.
Background
Platforms are managed investment schemes (MISs) for holding and dealing with investments selected by clients.
ob体育鈥檚 current regulatory approach to platforms is set out in Regulatory Guide 148 Investor Directed Portfolio Services (RG 148) and accompanying class order relief for investor directed portfolio services (IDPSs) and IDPS-like schemes.
ob体育 expects that the Government鈥檚 Future of Financial Advice reforms, if enacted as proposed, will have significant impacts on the platforms sector. This consultation paper does not address areas of its regulatory approach that are directly related to these reforms, a key example of which is management of conflicts of interest. ob体育 will consider how these reforms may affect its final approach to providing guidance for platforms following enactment of legislation and further consultation.
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Consultation Paper 176 Review of ob体育 policy on platforms: Update to RG 148 (CP 176)