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Allens Funds Management publications

Focus: Final APRA Guidance on Information Security released – Are you prepared?

APRA has released the updated final version of its Prudential Practice Guide, which gives crucial context about how it views cybersecurity threats, and clarifies some of the steps that should be taken now relating to board oversight, information security controls and notification of information security incidents. Partner Valeska Bloch and Associate Claudia Hall report.

Unravelled: The beginning of the end of the unit trust’s monopoly?

It is surprising the Federal Government did not make more of its release on 4 June of the Board of Taxation’s report on tax arrangements applying to collective investment vehicles. We can only assume that the government was slightly embarrassed that the report, handed to the previous government in 2011, has taken nearly four years to emerge, blinking, into the light. Be that as it may, it is here now, and it makes for interesting reading. If the Board’s recommendations are followed, they will change the Australian funds management industry. Put at its most basic, the report recommends nothing less than breaking the near-monopoly that the unit trust has held over collective investment vehicles in Australia.

Unravelled: Regulating bonuses: will Australia be next?

The UK’s Financial Conduct Authority and Prudential Regulation Authority released rules, in June this year, to further tighten what are already fairly onerous restrictions on the payment of bonuses to staff in banks, building societies and certain big investment firms. The world’s financial regulators have, for some time, been trying to crack down on what they consider to be inappropriate remuneration structures and it begs the question – will Australia be next?

Client Update: AIFMD – the future of marketing to European investors

The European Securities and Markets Association has published its initial advice and opinion on the functioning of the marketing passport and national private placement regimes since the implementation of AIFMD, and the possibility of extending the marketing passport to non-European fund managers. Although the scope of the advice is limited, the key takeaways are that the introduction of a marketing passport for Australian fund managers and the abolition of national private placement regimes still look to be some way off. Partner Marc Kemp, Senior Overseas Practitioner James Kanabar and Law Graduate Sophie Allchurch report.

Unravelled: The beginning of the end of the unit trust’s monopoly? A look at corporate CIVs

The Board of Taxation’s report on tax arrangements applying to collective investment vehicles advocates extending tax neutrality to three additional collective investment vehicles: corporates (modelled on the Luxembourg SICAV), limited partnerships and common contractual funds. In this issue, we examine the key characteristics of corporate collective investment vehicles and some of the implications of their introduction and use in Australia.

Unravelled: The UK’s focus on personal accountability for bank employees: a sign of things to come?

Last month we discussed the ‘carrot’ in the UK Parliamentary Commission on Banking Standards – how the regulators are making sure remuneration for bank staff encourages prudent risk behaviour. This month we are looking at the ‘stick’ – how the UK is strengthening regulators’ enforcement armoury to enable them to more easily take action against individuals who do not meet the conduct standards expected of them.

Unravelled: The beginning of the end of the unit trust’s monopoly? A look at common contractual funds

The Board of Taxation’s report on tax arrangements applying to collective investment vehicles considers that offshore investors are dissuaded from investing in Australian funds because they do not understand unit trusts, and that access to a broader range of collective investment vehicles would help Australian fund managers to compete for capital with their offshore counterparts. The Board of Taxation advocates extending tax neutrality to three additional collective investment vehicles. In the final of our series investigating these vehicles, we look at common contractual funds, which may be unfamiliar to many in the Australian market.

Unravelled: The beginning of the end of the unit trust’s monopoly? A look at limited partnerships

The Board of Taxation’s report on tax arrangements applying to collective investment vehicles advocates extending tax neutrality to three additional collective investment vehicles: corporates (modelled on the Luxembourg SICAV), limited partnerships and common contractual funds. In this issue, we examine limited partnerships, which are not commonly used as collective investment vehicles in Australia.

Focus: New AMIT rules

New legislation has been introduced into Federal Parliament that will replace the existing taxation regime for trusts which qualify as Attribution Managed Investment Trusts. Partner Charles Armitage and Managing Associate Judith Taylor look at what is different from the original Exposure Draft.

Unravelled: Crowd-sourced equity funding

The Government has finally begun the process of implementing its policy on crowd-sourced equity funding (CSEF) by introducing a Bill and releasing draft exposure regulations late last year, which envisage the establishment of a CSEF regime in Australia. The Bill has been referred to the Senate Economics Legislation Committee who are expected to report later this month.

Client Update: Productivity Commission kicks off inquiry into superannuation

The Productivity Commission has released an issues paper inviting submissions on the criteria that should be used to assess the efficiency and competitiveness of Australia’s superannuation system. This will be of interest not only to superannuation trustees but also to service providers, including fund managers, who may be put under greater scrutiny. Submissions are due by 20 April 2016. Partner Michelle Levy and Senior Associate Simun Soljo look at the issues paper.

Unravelled: Would you like best interests with that? Conflicted remuneration, American style

Last month, we were fortunate enough to host Barney Frank, co-architect of the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010, to discuss financial regulation reform. Coincidentally, a couple of weeks later, we were treated to a presentation on US financial regulation reforms by a US lawyer, David W. Powell, at the annual superannuation lawyers’ conference. Powell’s presentation focussed on US efforts to expand ‘fiduciary’ duties for financial advisers, including those advising on Individual Retirement Accounts. IRAs now constitute a large chunk of US retirement savings. There are some interesting comparisons to be made between the proposed US rules and existing Australian financial advice laws. But perhaps most interesting of all is the proposed ‘best interest contract exemption’.

Unravelled: Bitter Harvest yields fertile ground for MIS reform

Last month, the Senate Economics References Committee handed down its long-awaited report on the structure and development of agribusiness-managed investment schemes. The Committee’s inquiry into agribusiness schemes had been instigated in June 2014 by Greens Senator Peter Whish-Wilson. While there had been an earlier Parliamentary Joint Committee inquiry, in 2009, into the high-profile agribusiness MIS collapses, the 2014 inquiry was intended to give the people and the rural communities affected by the MIS collapses a chance to be heard.

Unravelled: Spotting hurdles in the race to market Australian funds in Asia

The introduction of the Asia Region Funds Passport (ARFP) has been in the works for some time. The ARFP was one of the recommendations coming out of the 2009 Johnson Report and aims to provide a basis for cross-border marketing of managed funds in the Asia region. While there has been a tendency to focus on the benefits of the ARFP to consumers and fund managers in isolation, it’s a good idea to look at the ARFP in the context of some of the other Johnson Report recommendations that are being discussed, such as reforms to tax law and generally making different investment structures more attractive to investors.

Unravelled: A reprieve for ASIC and APRA … but not for the FCA

ASIC and APRA often cop flak from various quarters (including from us) and so today, for something different, we train our sights on the Financial Conduct Authority in the UK. What the FCA has said about providing personal advice to retail clients is interesting, debatable and likely to induce a strong sense of déjà vu.

Unravelled: The end of the AML/CTF regime as we know it?

The past year or so has been an action-packed one for devotees of anti-money laundering policy and the recent release of the Report on the Statutory Review of the AML/CTF Act 2006 may herald the most significant changes to our regime since it was introduced a decade ago.

Client Update: ASIC releases consultation paper on regulatory sandbox exemption for startups

ASIC has released a consultation paper on proposals to facilitate innovation in the financial services sector. The proposals include details of the long-awaited ‘regulatory sandbox’. It will be of interest to both emerging companies who may rely on the relief, as well as investors in this space. Senior Associate Simun Soljo and Law Graduate Antonia Ross look at what the paper proposes.

Client Update: Registered schemes’ constitution

ASIC has said it will grant relief to assist responsible entities (RE) of registered schemes to make changes to their constitutions to qualify for the new attribution managed investment trust (or AMIT) regime without holding a unitholders’ meeting. Partner Marc Kemp and Law Graduate Antonia Ross review the key elements of the announcement.