Govt launches consultation on MIS regulatory framework

managed investment scheme Stephen Jones treasury

8 March 2023
| By Laura Dew |
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The Government has announced it will launch a consultation into the regulatory framework for managed investment schemes (MIS).

Minister for financial services, Stephen Jones, said Treasury was reviewing the framework and a public consultation would be launched mid-year.

This review would ensure there were strong investor protections in place across the financial sector, with the industry having seen several high-profile MIS failures including Trio Capital and Sterling Income Trust. 

The review would examine whether the regulatory framework was fit-for-purpose, identify potential gaps, and consider what enhancements could be made to reduce undue financial risk for investors. 

It would consider reform options, focusing on:
•    Whether the thresholds that determine whether an investor is a retail or wholesale client remain appropriate;
•    Whether certain MIS investments should be able to be marketed and sold to retail investors;
•    The various roles and obligations of responsible entities and whether the governance, compliance and risk management frameworks for MIS are appropriate; and
•    Interactions between Commonwealth and State laws when regulating real estate investments by MIS (including issues arising in relation to the failure of the Sterling Income Trust).

Treasury would also consider:
•    Whether ‘investor rights’ for people who invest in MIS are appropriate;
•    Liquidity requirements for MIS; and
•    Whether an insolvency regime is required for MIS.

Treasury would release a public consultation paper by mid-year and consult with industry before reporting findings to Government by early 2024.

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