Allens

Funds Management

Our experienced Funds Management team regularly publishes articles and updates - the full list of publications appears below. These publications provide a snapshot of the latest legislation, court cases, policy changes and contentious issues affecting the property and investment industries. If you'd like to be notified when we add new funds management publications to the site, please go to our subscription page to sign up for email alerts or, alternatively, you can subscribe to our RSS feed.

Read about Allens' track record in this dynamic area.

Funds Management Publications

  • Client Update: Treasury consultation paper flags changes to stapled structures

    28 March 2017

    Stapled structures have been used as an investment platform in the property and infrastructure sectors for decades, and more recently have been deployed into renewable energy, agriculture and other areas. Through the issue of its Taxpayer Alert on stapled structures on 31 January 2017, the ATO indicated that it had serious tax integrity concerns with the proliferation of stapled structures. The Commonwealth Treasury has now revealed that it has also been concerned at the increasing impact of stapled structures on the corporate tax base by releasing a Consultation Paper calling for submissions on potential policy options in relation to stapled structures, the taxation of real property investments and the recharacterisation of trading income. Partner Martin Fry and Senior Associate Igor Golshtein report.

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  • Client Update: Innovative Superannuation Income Streams - at last

    21 March 2017

    Earlier today, Treasury released exposure draft regulations for 'Innovative Superannuation Income Streams'. They set out income stream standards that will be relevant for products such as deferred annuities and group self-annuitised products. The Allens Superannuation team reports.

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  • Unravelled: English High Court provides important guidance on approach to LIBOR mis-selling claims

    7 February 2017

    The English High Court has handed down its judgment on the first major case following the global regulatory investigations into alleged LIBOR manipulation.

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  • Unravelled: Improving external dispute resolution schemes - rather odd recommendations

    7 February 2017

    It is difficult to describe the interim recommendations of the Expert Panel reviewing the 'financial system external dispute resolution and complaints framework' as anything other than odd.

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  • Unravelled: Mandatory margining

    7 February 2017

    Late last year, APRA released the implementation schedule for its long-awaited Prudential Standard CPS 226 Margining and risk mitigation for non-centrally cleared derivatives.

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  • Client Update: Product design and distribution rules

    13 December 2016

    On 13 December 2016, Treasury released a paper seeking feedback on the proposed financial product design and distribution obligations, and proposed product intervention powers for ASIC. The proposals are intended to 'create new accountability obligations' for product issuers and distributors. On one view, it is a brave new world, on another, it is just more of the same. Which it turns out to be, we think, will depend on what product issuers make of it and what ASIC does with it. Industry has until March 2017 to make submissions on the detail, it is unlikely that more substantial objections to the policies will be successful. The Financial Services Regulation team report.

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  • Unravelled: Seeking judicial advice on whether to seek judicial advice

    9 December 2016

    For more than 150 years trustees have been able to obtain advice from courts on matters affecting the management or administration of trust property and on matters respecting the interpretation of trust deeds. Trustees would usually only seek such advice, however, if they had doubts about a proposed course of action.

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  • Unravelled: Insourcing investment management in super - challenges and opportunities for in-house teams

    9 December 2016

    With the release of an ASFA Best Practice Paper on insourcing investment management, we look at some of the challenges and opportunities for in-house legal teams that come with the seemingly inexorable move in the superannuation industry towards insourcing investment management functions.

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  • Client Update: Updated fee and cost disclosure - transition period extended

    29 November 2016

    ASIC has today announced that superannuation fund trustees and responsible entities will have until 1 October 2017 to comply with the updated fee and cost disclosure rules for PDSs set out in ASIC Regulatory Guide 97 and ASIC Class Order 14/1252 - but only if they comply with certain conditions. Partner Geoff Sanders and Senior Associate Stephanie Malon report.

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  • Focus: Road map to anti-money laundering and counter-terrorism financing reform

    4 November 2016

    The Federal Attorney-General's Department has released its draft Project Plan for the implementation of the wide-ranging recommendations arising from the recent statutory review of Australia's anti-money laundering and counter-terrorism financing regime. Partner Peter Haig, Associate Andrew Shetliffe and Lawyer Russ Marshall report.

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  • Unravelled: Life insurance, conflicted remuneration and commissions

    3 November 2016

    The Bill to amend the conflicted remuneration provisions in the Corporations Act for life insurance has been introduced into Parliament a second time and draft regulations have been released for comment. However, we struggle to know how to describe them because the changes seem to have conflicting purposes.

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  • Unravelled: Risk culture - 'an evolving area of supervisory practice'

    3 November 2016

    A director of a bank, life company or general insurer who read APRA's recent information paper on risk culture could be excused for indulging in a wry smile. Since mid-2015 he or she has been subject to legislative obligations concerning risk culture. However, the information paper suggests that APRA is still working out what risk culture is and how to assess it.

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  • Unravelled: The ASIC Enforcement Review Taskforce unloaded

    3 November 2016

    The ASIC Enforcement Review Taskforce members and terms of reference have been announced. The terms of reference are very broad and come as no surprise, with an emphasis on evaluating the adequacy of ASIC's enforcement toolkit. We analyse the key themes that are likely to emerge.

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  • Client Update: Conflicted remuneration and life insurance

    20 October 2016

    Exposure draft life insurance regulations were released yesterday. They are a marked departure from the existing conflicted remuneration provisions. Now, a benefit can only be conflicted remuneration if it could reasonably be expected to influence financial product advice. These regulations will create a new class of conflicted remuneration for life risk insurance products that does not depend on the benefit being expected to exert the relevant influence. This will apply 'in addition' to the existing definition of conflicted remuneration. Partner Michelle Levy, Senior Regulatory Counsel Michael Mathieson and Managing Associate Simun Soljo look at the draft regulations.

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  • Unravelled: Are super funds and managed investment schemes the next frontier for shareholders with activist agendas?

    7 October 2016

    A recent Federal Court appellate decision highlights the fundamental tension in the Corporations Act between shareholders' power to propose resolutions at members' meetings and the proposition that a company is to be managed by its Board of directors.

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  • Unravelled: Practical pitfalls and the sacrosanct limitation of liability clause

    7 October 2016

    Commercial trusts could not operate without limitation of liability clauses; however, getting a limitation of liability clause just right is very challenging.

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  • Client Update: Passporting relief threatened in ASIC Class Order repeal

    29 September 2016

    Foreign financial services providers relying on passporting a foreign licence to provide their services in Australia will find their regulatory relief could be expiring in 2 years – and has become subject to a new condition – following ASIC's actions to repeal the ASIC Class Orders which give effect to Australia's passporting relief regime.

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  • Client Update: Designing effective remediation programs

    19 September 2016

    ASIC issued Regulatory Guide 256: Client review and remediation conducted by advice licensees late last week. In short, RG 256 says an Australian financial services licensee's duty to provide financial services 'efficiently, honestly and fairly' means they have to take responsibility for the consequences of things going wrong. When what has gone wrong amounts to a systemic error relating to advice provided to retail clients, taking responsibility means a review and remediation conducted in a 'comprehensive, timely, fair and transparent' manner. Partners Michelle Levy and Malcolm Stephens and Associate Jonathan Gardner report.

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  • Unravelled: Financial Services Class Actions

    6 September 2016

    Our class actions team recently published our Class Action Risk 2016 report. The objective of the report is to look behind the headlines and hype that often surrounds class actions to provide a more holistic and objective assessment of class action risk for our clients. This is particularly important in an environment in which the press surrounding class actions has often heralded a developing crisis for Australian business.

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  • Unravelled: Not better late - the Prime Trust appeal judgment

    6 September 2016

    The main Prime Trust appeal judgement is relatively well known, but a trust's responsible entities and their officers should look at what the appeal court had to say on other related matters.

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  • Unravelled: Conflicts of interest and the duty to manage them

    9 August 2016

    The Corporations Act 2001 (Cth) was amended in 2004 to include an additional obligation for Australian financial services licensees to have in place adequate arrangements for the management of conflicts of interest that may arise in relation to the activities undertaken by the licensees in the provision of financial services. Conflicts were an afterthought, coming a couple of years after the Financial Services Reform Act (Cth) in 2001. At the time, it didn't seem to be a particularly onerous obligation, and so it has proved. The regulators and various enquiries and committees have criticised financial services providers for letting conflicts of interest get in the way of their customers' interests, but the Corporations Act obligation to have adequate arrangements for managing conflicts is a poor basis for requiring licensees to put their customers' interests first'

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  • Unravelled: Post-election policy recap

    9 August 2016

    As the dust settles following the recent federal election, it is a good time to reflect on what we can expect from the re-elected Coalition Government for the financial services sector. There are two main groups of policy proposals that are going to need to get through Parliament. The first is the fairly significant superannuation changes announced in the 2016/17 Budget in May. The second is the series of changes the Government announced in its response to the Financial System Inquiry. This brief article provides a refresher on each of them.

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  • Unravelled: Blockchain and why smart contracts still need smart lawyers

    6 July 2016

    There has been so much talk about blockchain and distributed ledger technology recently, especially in financial services, that you might be forgiven for thinking it might be more hype than substance. But we think it could be very important technology.

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  • Client Update: Important AMIT regime developments

    24 June 2016

    The Australian Securities and Investments Commission has granted relief to assist responsible entities of registered schemes to make changes to their constitutions to qualify for the new attribution managed investment trust regime without holding a members' meeting. In addition, and in response to submissions from various industry bodies, the Australian Taxation Office has confirmed the deadline by which amendments need to be made for it to treat a trust as having qualified as an AMIT for any part of the income year commencing 1 July 2016. Partner Marc Kemp, Senior Tax Counsel Judith Taylor and Senior Overseas Practitioner James Kanabar review the key elements.

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  • Special Report: Understanding the opportunities and navigating the legal frameworks of distributed ledger technology and blockchain

    17 June 2016

    Authored by a multidisciplinary team from Allens, Blockchain Reaction is designed to assist business stakeholders, decision makers and in-house counsel across a variety of sectors to understand the technology and how it is being used, as well as navigate the regulatory and legal opportunities and challenges.

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

    9 June 2016

    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.

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  • Client Update: Registered schemes' constitution

    3 June 2016

    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.

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

    2 June 2016

    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.

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

    2 June 2016

    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.

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  • Unravelled: AMITs are here (at last)

    2 June 2016

    It has taken a while, but out of the dust of an early Federal Budget and double-dissolution election announcement, a new tax attribution regime for 'Attribution Managed Investment Trusts' has emerged relatively intact. While the AMIT regime should generally be welcomed as a positive thing for MITs in terms of certainty and flexibility, it remains to be seen whether it will achieve another of its original aims.

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  • Unravelled: New ASIC funding - looking beyond the headlines

    4 May 2016

    Along with the public release of the ASIC Capability Review Report, the Government announced a suite of reforms giving ASIC additional (but targeted) funding and has also sought to remove some of the shackles on hiring it believes may be hindering ASIC's ability to recruit top talent. At the same time, the Government confirmed that a 'user pays' model will be introduced for ASIC's funding needs from the second half of 2017 onwards.

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  • Unravelled: ASIC getting a bigger toolkit sooner than expected

    4 May 2016

    In its response to the capability review into ASIC, the Federal Government has made a commitment to accelerate the implementation of a product intervention power for ASIC and the product design and distribution obligations for the financial services industry, but it left to one side some other important issues raised by the review. We consider what this might mean for both the regulator and the regulated.

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  • Unravelled: 'Tough cop' ASIC vs a Royal Commission

    4 May 2016

    Has talk of a royal commission turned the ASIC Capability Review into an unlikely catalyst for an enhanced enforcement agenda? With Labor pushing hard for a royal commission into the banking and financial services industry and an election looming, the Government moved swiftly to announce broad reform measures to equip ASIC with stronger powers and funding, as well as a new Commissioner with a financial crime prosecution background, to ensure that, in ASIC, Australia has a 'tough cop on the beat'.

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  • Unravelled: A long time coming: The Retirement Income Streams Review Report

    4 May 2016

    Going into the 2013 election, the present Government promised a review of the regulatory framework for retirement income streams. Today, the Government finally released its report. It has been a long time coming. And while the main outcome – a new category of tax effective pensions and annuities – will be welcomed by many, there are unanswered questions and implementation may take a while.

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  • Unravelled: Bitter Harvest yields fertile ground for MIS reform

    5 April 2016

    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.

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

    5 April 2016

    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.

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  • Client Update: ASIC's guidance on conflicts in vertically integrated funds-management businesses

    24 March 2016

    ASIC has released a report looking at the way 'vertically integrated' funds management businesses deal with conflicts of interest. The report summarises the findings of ASIC's recent review of a number of businesses, and sets out some good practice recommendations. Partner Marc Kemp and Senior Associate Simun Soljo look at the report.

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  • Client Update: Productivity Commission kicks off inquiry into superannuation

    17 March 2016

    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.

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  • Unravelled: Dodd Frank - promoting financial stability and other purposes

    7 March 2016

    The Dodd Frank Act is a bit like the US financial system it is trying to regulate – vast, complex and hard to wade through. It creates a bunch of new regulators on top of what was already a pretty solid cast and gives them wide-ranging powers. They can not only set capital and liquidity requirements for banks and make rules about what they can and cannot do, but they can also shut down or sell off parts of their businesses. But are these regulators smart enough or well enough resourced to identify the risks?

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

    7 March 2016

    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'.

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  • Unravelled: Transparency and Accountability - and not just for Wall Street

    7 March 2016

    The regulatory law repercussions of the GFC remain endlessly fascinating. As an example, take the Dodd-Frank Wall Street Reform and Consumer Protection Act 2010. It runs to 848 pages. Title VII addresses, perhaps optimistically, 'Wall Street Transparency and Accountability'. My favourite provision is section 716, headed 'Prohibition Against Federal Government Bailouts of Swaps Entities'. This heading suggests that, if there is ever another AIG, it can't be bailed out. Too-big-to-fail solved by legislative prohibition. If only it was that easy.

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  • Unravelled: Crowd-sourced equity funding

    5 February 2016

    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.

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  • Unravelled: Raising professional standards of financial advisers

    5 February 2016

    Following on from the reviews conducted by the Parliamentary Joint Committee and the Financial System Inquiry, the Government delivered on its promises by releasing an exposure draft of the Corporations Amendment (Professional Standards of Financial Advisers) Bill 2015 (the Bill) late last year for consultation. As its title suggests, the draft Bill proposes a number of amendments to the Corporations Act to raise the professional standards of financial advisers that are to apply from 1 July 2017. Many of these reforms impose obligations that licensees in the retail financial advice and superannuation trustees should carefully consider and begin making provision for.

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  • Focus: New AMIT rules

    15 December 2015

    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.

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  • Unravelled: Product rationalisation - again

    8 December 2015

    The FSI report recommended that the Government facilitate rationalisation of legacy products in the life insurance and managed investment scheme industries. The need for ways to close legacy products has been kicking around for at least a decade and, in 2007, Treasury released a very thorough options paper covering product rationalisation in the managed funds sector. Treasury said that sector was represented by life insurance, managed investment schemes and superannuation.

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  • Unravelled: Government launches innovation agenda - now wait for the ideas boom

    8 December 2015

    You might be getting tired of all of the talk about 'innovation', and keen to see some of it actually happen. The Government's recent announcements could help, but there is a long way to go before the 'mining boom' becomes the 'ideas boom'.

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

    8 December 2015

    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.

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  • Unravelled: FSI outcomes - what will happen and when?

    8 December 2015

    Are you interested in the financial system and how it is regulated? The Federal Government's response to the Financial System Inquiry was recently handed down but it can be hard to work out where, exactly, things are heading. We have put together a table that sets out what is likely to happen and when.

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  • Client Update: Major overhaul of Australia's foreign investment laws: what's new?

    4 December 2015

    The new package of legislation overhauling Australia's foreign investment laws, the first major revision in 40 years, commenced on 1 December 2015. While many features of the previous regime have been retained (and sometimes re-named), there are also a number of significant changes. Partners Jeremy Low, Wendy Rae and Richard Kriedemann and Senior Associate Eve Regnard review the key new elements.

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  • Unravelled: What does the Government's response to the FSI mean for banks?

    6 November 2015

    The short answer is: it depends on which kind of bank you are. The Financial System Inquiry's final report and the Government's response mean a lot for ANZ, CBA, NAB and Westpac, particularly given their significant residential mortgage portfolios. They also mean a lot for Macquarie. As for the rest of the banks, they are likely to see the ramifications for the major banks as their own gain.

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