Compliance key for property fund managers
Retail property fund managers will need to closely consider their compliance measures ahead of a two-year deadline to comply with product legislation passed in April.
The Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Power) Bill 2019 was passed into law on 5 April 2019 and product intervention powers applied immediately. Further legislation on design and distribution obligations will come into force from 5 April 2021. The Act does not apply to wholesale products.
However, the Property Funds Association (PFA), which represents the $125bn Australian unlisted wholesale and retail property funds sector, said two years is ‘not a long time’ for property fund managers to comply with this regime.
It is also worried the legislation will limit the choices available to retail unlisted property investors.
PFA chief executive, Paul Healy, said: “PFA believes the Act mandates a compliance regime which could see managers shun retail products and favour wholesale products, limiting the choices available to retail unlisted property investors.
“Many unlisted property funds will find it more difficult and expensive to bring retail products to market.”
Healy added that the Act would mean responsibility shifted from the financial adviser to the product issuer.
“Product issuers may need to take extensive precautions with investors, including potential for needing to put in place fact finding measures, consumer testing or/and ensuring that financial advice is provided to prospective investors, even for simple products which are well understood in the marketplace.”
AUTHOR
Laura Dew
Recommended for you
The $365 billion UK fund manager Royal London Asset Management is to launch two funds in Australia by the end of November as it seeks to build an international presence.
With ETF pricing becoming more competitive than ever, those active ETF vehicles priced higher than 120bps are the only segment of the popular product to see outflows.
Income Asset Management has promoted former ASIC commissioner, Danielle Press, as chair of its board following the retirement of John Nantes.
Lazard Asset Management has announced the launch of a new global equity fund, expanding its qualitative offering for Australian investors.
