The corporate regulator has welcomed the passage of new reforms by Parliament, which remove an exception in the client money regime.
In a statement yesterday, ASIC said the Treasury Laws Amendment (Measures No. 1) Bill 2016 removes an exception in the client money regime that allows AFSLs to withdraw client money provided in relation to retail OTC derivatives from client money trust accounts, and use it for a wide range of purposes including as working capital.
The exception places retail derivative client money at greater risk of loss, particularly in the event the licensee becomes insolvent, ASIC said.
The amendment now requires licensees to hold retail derivative client money on trust. The requirement to hold client money on trust already applies to the vast majority of financial products and financial services under Australia's client money regime, ASIC said.
The bill also give ASIC a power to write client money reporting and reconciliation rules. Further, it gives the industry a 12-month transition period in which to implement the reforms and adapt to the new regime.
ASIC commissioner Cathie Armour said, “The amendments to the client money regime made in the bill have strengthened the protection of client money that is provided to retail derivative clients. Doing so will help to increase investor confidence in the Australian financial system.
“We look forward to continued engagement with industry to assist industry to implement the amendments made by Parliament, including ASIC's new power to write client money reporting and reconciliation rules.”
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 19 Oct 2018Life insurer fires 50, kills outbound sales businessBy James Mitchell
- 19 Oct 2018Strategic plan for AFCA releasedBy Eliot Hastie
- 18 Oct 2018Clique Paraplanning launches practice portalBy Reporter
- 18 Oct 2018Challenger announces new Netwealth dealBy James Mitchell
- 18 Oct 2018Aussies say royal commission won’t change their view of adviceBy James Mitchell
- 18 Oct 2018Hire younger advisers to get younger clients, paper suggestsBy Adrian Flores
- view all