Call to upgrade MIS regime to international best practice

Mike Taylor

Managing Editor and Publisher

16 February 2026

Australia’s regulatory regime around Managed Investment Schemes (MISs) lacks the rigour of international models such as those used in the United Kingdom and Europe because it lacks imposing structural independence for Responsible Entities (REs), according to former Equity Trustees Global Head of Fund Services, Harvey Kalman.

Kalman is pitching the Treasury a model reflecting overseas best practice which would see products designed either ‘simple’ or ‘complex’ with regulatory requirements tailored accordingly.

He says this is necessary in circumstances where, over the past 26 years, complex products have been sold to retail investo4rs, and persistent mismatches have existed between product complexity, liquidity and underlying assets.

Kalman has told the latest Treasury MIS consultation that the current RE model lacks structural independence, allowing managers to act as their own REs and issue products without sufficient oversight.

“This has led to repeated regulatory reviews without addressing the core problem,” he says.

Kalman’s submission points to the models in the UK and Europe which he says prove that independence and clear accountability are essential for effective governance.

“Empirical evidence shows that markets with independent oversight experience fewer investor losses and greater market stability,” his submission said

“The proposed segmentation into Simple and Complex products aligns regulatory requirements with product risk, reducing unnecessary red tape for low-risk products while strengthening oversight for higher-risk offerings,” Kalman said.

Explaining the Simple vs Complex RE model, the submission states:

Simple Products:

• Defined as managed investment schemes with no more than 5% in any individual asset class and 20% total in higher-risk asset classes: hedge funds, shorting, fixed interest, Loans, gearing, derivatives, property, illiquid assets ie asset classes not designed for simple investors.
• Can be issued by any licensed Trustee or RE, subject to capital and insurance requirements = Simple Licence.

Complex Products:

• All other products not meeting the Simple criteria.
• Require higher regulatory capital, professional indemnity insurance, an independent board, and an “Office of the RE” with designated oversight roles.
• Investors must be professional or advised by accredited financial advisors who are able to advise on Complex Products.

Kalman’s submission also calls for changes to impose a requirement for majority independent boards for Res issue complex products, with mechanisms for oversight by the Australian Securities and Investments Commission (ASIC).

He also recommends the creation of an Office of the RE with clearly defined roles for compliance, investment, distribution and risk oversight staffed by qualified professionals.

As well he is urging ongoing operational compliance with a shift from point-in-time audits to continuous monitoring and regular external audits, in line with best international practice.