Greater disclosure expected from platforms

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ASIC’s revised guidance for platforms has been welcomed by UMA platform provider OneVue, who says investors deserve protection, whatever their choice of investment structure.

The revised RG 148, now named platforms that are managed investment schemes, requires investment platform operators to explain how they choose the different products on offer to investors through their platforms.

 “OneVue welcomes the enhanced rigor that ASIC’s policy will bring to [Investor Directed Portfolio Services] IDPS operators in terms of their structure and capital, arrangements for disclosing conflicts of interest, management of the new opt in regime and choice of investments available through their platforms,” said OneVue chief executive of strategic relationships Brett Marsh.

“Since ASIC introduced tighter capital requirements for Responsible Entities in 2012, which are applicable to OneVue as we are a Responsible Entity, it has been our view that IDPS operators should be subject to the same discipline.”

ASIC said that the reforms were necessary because “there is a trend towards new forms of vertical integration between parties in the product distribution chain.”

The regulatory impact statement from ASIC said, “Vertical integration could exacerbate conflicts of interest, placing IDPS operators (who are also dealer groups) in a position to direct many clients to in-house products. These trends are already evident in the market and management of the risks associated with the behaviour is necessary.”

"Our updated guidance moves with the times and recognises that, with consumers taking a more hands-on approach to investing, their rights must be at the forefront of platform operators’ minds," ASIC Commissioner Greg Tanzer said.

"Consumers may assume that products on a platform are ultimately going to work for their benefit. ASIC wants to ensure they make confident, informed choices and are aware of platform operators’ practices."

Requirements include:

  • Ensuring they have adequate resources to conduct their financial services businesses
  • Having appropriate corporate structures and compliance arrangements
  • Having additional policies like voting policies and policies when consumers do not opt in to continuing to receive advice, and;
  • Improved disclosure through a consumer warning acknowledgment.

Investors will also have access to a product issuer’s internal dispute resolution system when they have concerns about investments made through platforms and product issuers agree to do so.

ASIC will consider extending the requirement to cover external dispute resolution and corresponding compensation arrangements.

The regulator said that while some of the new requirements may be more burdensome on smaller platform operators than medium to large operators, it does not expect significant costs for the industry.

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