Mulino’s MIS review is back to the future
ANALYSIS
Anyone getting excited by the Government’s announcement of a consultation around “Enhancing oversight and governance of managed investment schemes” should consider that a 2023 Treasury Review of the regulatory framework for Managed Investment Schemes is actually “ongoing”.
Yes, in March 2023 the former Assistant Treasurer and Minister for Financial Services, Stephen Jones announced the review which then kicked off in August of that year and, according to the Treasury web site is “ongoing”.
In other words, what was announced by the Jones’ successor, current Assistant Treasurer and Minister for Financial Services, Daniel Mulino, is essentially unfinished business.
Sadly nowhere in the latest consultation is there even the hint of the Government delivering what most financial advisers want – the inclusion of Managed Investments Schemes in the funding catchment of the Compensation Scheme of Last Resort.
Perhaps that will come later.
For those who have short memories, these were the core points canvassed in the 2023 consultation paper:
- the thresholds that determine whether an investor is a wholesale client
- whether certain managed investment schemes should be marketed and sold to retail clients
- the roles and obligations of responsible entities
- whether ‘investor rights’ are appropriate
- liquidity requirements for managed investment schemes
- whether an insolvency regime is required for managed investment schemes
- interactions between Commonwealth and State laws when regulating real estate investments by managed investment schemes.
So, no surprises then, that the 2026 version outlines the key consultation points as being:
- Strengthen the regulatory framework for compliance:
1.1. Introduce stricter compliance plan requirements, such as requiring a detailed description of the nature of the scheme and its investment strategy, and information outlining how significant risks will be identified, monitored and managed,
1.2. Amend the liability framework for compliance plans, such that liability attaches only to material contraventions of a plan, to incentivise higher quality plans,
1.3. Make existing audit and assurance standards mandatory for auditors of compliance plans, and
1.4. Require responsible entities to notify ASIC of the appointment, removal or resignation of committee members.
- Require responsible entities of registered MISs to have a majority of external directors and remove the option of having a mandatory compliance committee instead.
- Prohibit responsible entities of registered MISs from conducting related party transactions, with limited exceptions.
- Amend the framework for setting financial requirements for responsible entities, such as setting more specific requirements.
- Increase ASIC’s data collection powers on the retail MIS sector.
- Alerts to ASIC about superannuation switching.
Mulino can expect that this latest review will attract a lot of submissions because in 2023 Treasury received no fewer than 85 submissions which, ultimately, has yet to translate into a Government policy framework notwithstanding many of the warnings contained in submissions from the likes of the Financial Advice Association of Australia appearing relevant to the Shield and First Guardian experiences.
The closing date for submissions to the current review is 27 February which isn’t long but, then again, many stakeholders can always refer to their 2023 efforts.
Hey Treasury / Govt / Jonesy / ASIC please show us the MIS review work done in the last 3 years.
Surely the starting point for this next review, is to review the review started 3 years ago.
Or did the dog eat your home work Jonesy ?
Taylor nails it. This is unfinished business wearing a new cover page. The 2023 review went to wholesale investor thresholds, whether certain MISs should be marketed to retail clients at all, liquidity requirements, insolvency regimes. Eighty-five submissions went in. ASIC gave it 50 pages. Three years on, we’re being asked to go again on a narrower set of proposals because the first effort was left to rot.
He’s right on the CSLR too. The consultation paper acknowledges Shield and First Guardian have put “increased pressure” on the CSLR, then kicks it to a separate options paper. The CSLR’s original $8.1 million cost estimate has blown out to $75 million in three years and MIS losses still sit outside its funding catchment. Advisers cop the levy for a scheme that doesn’t cover the product failures doing the real damage. That should be front and centre here, not parked for later.
And nobody — not Treasury, not the media — is talking about member agency. Everything in this consultation treats switching as something to surveil and report. Not once does it ask how we help members make better decisions. “Vulnerable cohorts” get framed as people who need protecting from themselves rather than people who need better information. If the Government actually cares about consumer protection, it should care as much about supporting good switching as catching bad switching.
Friedrich Hayek warned in The Road to Serfdom that centralised power rarely retreats once granted, and that the language of protection is the most effective vehicle for acquiring it — precisely because it’s nearly impossible to publicly oppose. Who wants to be the one arguing against protecting older Australians or low-balance members? That’s exactly what’s happening here. “Vulnerable cohorts” does the rhetorical heavy lifting while the actual machinery being built — undefined reporting triggers, expanded data collection powers, mandatory alerts regimes — is infrastructure that can be pointed at anyone, not just the vulnerable. Once it’s in, it doesn’t get wound back.
The 27 February deadline is tight, but as Taylor points out, most of us can dust off our 2023 submissions. Whether anyone at Treasury reads them this time is another matter.