The Australian Securities and Investments Commission (ASIC) has recognised trustees' desire to save costs under the national regulatory framework for trustees, releasing approval criteria for the transfer of assets to a single Australian Financial Services (AFS) licence.
ASIC said the national regulatory framework made it possible for trustee groups with subsidiaries previously under State and Territory jurisdiction to use voluntary transfer provisions to reduce their number of AFS licences.
Under the criteria, trustees seeking an intrafund transfer of assets will need to provide ASIC with details on shareholders, the ultimate holding company, and the proposed management and organisational structure pre and post the transfer.
A host of other information including reporting, fee and staffing levels as well as physical premises and client 'best interest' will also need to run the gauntlet before receiving ASIC approval.
ASIC said the client's best interest would drive the determination of arm's-length transfers under the same voluntary transfer provisions, although the process involved greater scrutiny of each company's due diligence and project plans.
Trustees must provide the pros and cons of any transfer of assets to another trustee company, investment strategy details, how the transfer would take place and other regulatory approvals.
Similar details were needed for the compulsory transfers of assets; in particular, the details of partial transfers which had legal ramifications, ASIC said.
ASIC said it would consult with the Australian Prudential Regulation Authority (APRA) before cancelling any trustee's AFS licence, but non-APRA regulated trustees could lose their licence to ASIC without a hearing.
Trustees who lost their licence would need to "take all reasonable steps" to alert clients to the cancellation and transfer process which ASIC would determine on a case-by-case basis.
ASIC was given the power to approve the transfers in May 2010 via amendments to the Corporations Act, and released a consultation paper in January this year.
"The limited feedback received was supportive of the proposals," they said.
