Read our CCIV Guide for the latest insights on the new regime



Financial Services Thinking – Issue 33

Welcome to the latest edition Financial Services Thinking showcasing the news from the corporate regulators. 

The Albanese Government’s review of the regulatory framework for managed investment schemes will ignite wide and lengthy debate in the funds management and broader financial services industries.  Read our ‘Hot Tip’ for all the details.

Please share Financial Services Thinking with your friends and colleagues, and we value your feedback.


ASIC continues with stop orders 

ASIC has recently published a regulatory developments timetable aimed at helping industry and businesses better anticipate when ASIC will issue draft or final guidance, or the anticipated making of a legislative instrument. The timetable will generally exclude review, surveillance, and enforcement activities. ASIC has indicated it expects to release updated class orders for the corporate collective investment vehicle (CCIV) regime. Read our CCIV Guide for what you need to know about the steps to get started and how to launch a CCIV product in the market. We can help you get the authorisations you need and launch your CCIV product.

ASIC’s latest stop orders are a timely reminder of the corporate regulator’s continued focus on target market determinations (TMDs).

On 9 March 2023, ASIC made two interim stop orders preventing Interactive Brokers Australia from issuing Stock Yield Enhancement Program Derivatives to retail investors because of deficiencies in the product’s TMD and product disclosure statement (PDS).

On 16 March 2023, ASIC issued stop orders against BT Advance Asset Management from distributing three funds to retail investors because of non-compliant TMDs. ASIC made the interim stop orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs. ASIC said the TMDs were very broadly drafted and failed to define key concepts such as what ‘medium’ and ‘high’ risk investor were. ASIC also said the distribution conditions outlined in the TMDs were inadequate.

To date, ASIC has issued 24 stop orders of this kind.

Are you on ASIC’s radar?  Get in touch with our Funds Management team and read our latest article to find out more.

Report on good practices for handling whistleblower disclosures

ASIC has published Report 758 outlining good practices for handling whistleblower disclosures. This report is off the back of a review of industry practice where ASIC identified that useful whistleblower reports and tip offs followed “thoughtful and well publicised arrangements for protecting whistleblowers”. A key takeaway is that entities are expected to provide structure through established procedures, documentation, and specalised roles.

Please contact our Funds Management Team if you need help developing or reviewing your whistleblower policy.

Changing responsible entities and equal treatment

ASIC consultation paper 367 sets out ASIC’s proposals to remake class orders about the imposition of financial resource requirements on the managed funds industry.

Comments are due by 11 April 2023 and the latest proposed commencement date of the new instruments is 29 September 2023.

Financial requirements on the managed funds industry

ASIC consultation paper 367 is seeking feedback on the imposition of financial resource requirements on the managed funds industry.

The only significant proposed change involves incorporating corporate collective investment vehicles (CCIVs) into ASIC Corporations (Financial Requirements for Corporate Directors of Retail Corporate Collective Investment Vehicles) Instrument 2022/449, which will require retail CCIVs to maintain a net tangible asset requirement.

Consultation closes on 31 March 2023.

Reach out to a member of our Funds Management team to find out with this means for you, and read our CCIV Guide for the latest insights on the new regime.

ASIC consults on class orders for IDPS and IDPS-like schemes

Consultation paper 639 sets outs ASIC’s proposal to remake the following class orders, otherwise set to expire on 1 October 2023— 

  • Class Order [CO 13/762] Investor directed portfolio services provided through a registered managed investment scheme 
  • Class Order [CO 13/763] Investor directed portfolio services. 

Consultation closes 28 April 2023. 


FATF updates on global ML/TF risk

AUSTRAC has noted the publication of two reports by the Financial Action Task Force (FATF), a global body that sets international AML/CTF standards.  FATF has released updated lists of high-risk jurisdictions subject to a call for action and jurisdictions under increased monitoring. Jurisdictions on these two reports are generally regarded as high-risk and are relevant to updates of AML/CTF risk assessments. 

Reach out to our Funds Management team for help with your AML/CTF questions and compliance. 

AUSTRAC accepts enforceable undertaking from PayPal 

AUSTRAC has accepted an enforceable undertaking (EU) from PayPal Australia (PayPal) to ensure its compliance with Australia’s anti-money laundering and counter-terrorism financing (AML/CTF) laws. The EU comes after AUSTRAC identified concerns with PayPal’s systems, controls, and governance in relation to the way it transfers international funds and the reporting process used. PayPal has already had an independent audit, to strengthen its program and committed to provide AUSTRAC with assurance of suitability and sustainability of its work.

This highlights the importance for businesses with obligations under the AML/CTF Act to have robust systems in place to meet their requirements and play a part in protecting Australia’s financial system.  Our Funds Management lawyers can help.


Treasury publishes report on foreign investment 

Treasury has published its second Quarterly Report on the Regulation of Foreign Investment in Australia.  The evaluation of the 2021 foreign investment reforms found that regular performance reporting would improve the transparency of foreign investment regulation in Australia.


State of financial crime report 

Comply Advantage has released its annual State of Financial Crime report detailing an international look at AML/CTF and financial crime. Key takeaways include— 

  • 79 percent of firms are willing to incur AML/CTF fines 
  • AML/CTF failings, on average, cause a 21 percent decline in share price
  • 59 percent of firms are bracing for increased financial crime as the market declines 48 percent of firms state their knowledge of regulations would be the compliance function ‘most at risk’ in an audit.

The above all demonstrate risk to funds management businesses and the importance of having in place adequate compliance and risk management procedures, particularly in uncertain economic times.  Reach out to our Funds Management team for assistance.


The Assistant Treasurer and Minister for Financial Service Stephen Jones, announced the Albanese Government is tasking Treasury with conducting a review of the regulatory framework for governing managed investment schemes (MISs). The review will focus on examining whether the regulatory framework is fit-for-purpose, identify any potential improvements to reduce financial risk to investors, and also identify potential gaps. The following matters will be considered by Treasury—

  • whether the way it is determined an investor is a retail or wholesale client is appropriate
  • whether certain MIS investments should be marketed and sold to retail investors
  • the various roles and obligations of responsible entities and whether specific frameworks are appropriate (governance, compliance, and risk management)
  •  whether investor rights are appropriate for people who invest in MISs
  •  liquidity requirements for MISs
  • interactions between Commonwealth and State laws when regulating real estate investments by MISs
  • whether an insolvency regime is required for MISs.

Treasury is to release a public consultation paper by mid-year. Consultation will then occur with industry before reporting findings to government by early 2024.

We anticipate this review will ignite wide and lengthy debate in the funds management and broader financial services industry.  We are following these developments closely and will keep you up to date. Watch this space!


Emma Donaghue

Emma Donaghue


Elliott Stumm

Elliott Stumm


Contact McMahon Clarke

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