Platform providers might be required to disclose their selection criteria for financial products included on their investment menus.
This is one of the proposals outlined in the Australian Securities and Investments Commission’s (ASIC’s) new Consultation Paper 176 Review of ASIC policy on platforms – an update to the current regulatory guide RG 148.
The financial services regulator is reviewing its regulatory approach to platforms and hopes to provide better guidance on the management of conflicts of interest.
ASIC’s announcement comes amid its expectation that the Government’s Future of Financial Advice reforms, if enacted as proposed, would have significant impacts on the platforms sector.
The current regulatory guide – RG148 Investor Directed Portfolio Services – does not address areas of ASIC’s approach that are directly related to these reforms, "a key example of which is management of conflict of interest," ASIC stated.
ASIC Commissioner Peter Kell said the regulator anticipates that more investors would seek to make direct investments without financial advice.
In a response to this shift in investor behaviour, ASIC proposes additional requirements for platform operators to "enhance investor rights associated with investments made through platforms".
"ASIC 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," Kell said.
The platforms sector attracts significant funds, with the level of non-superannuation related investment doubling to around $100 billion of funds under management over the last decade, ASIC said.
"This is a trend we expect to continue with new forms of vertically integrated business model emerging," Kell added.
