Deadline is Fast Approaching for MDA Service Providers!
Monday, 16 April 2018 | By David Court
If your business operates a Managed Discretionary Account (MDA) service through a regulated platform and has been relying on the “no-action” letter, this is a reminder that changes are happening and with little time remaining.
ASIC’s 2016 amendments to its Managed Discretionary Accounts policy included the removal of its no-action letter position for those advisers who provided an MDA on a regulated platform holding a limited power of attorney. Many advisers took advantage of this no-action letter as it meant no licence variation was required. However, as of 1 October 2018, those advisers who wish to continue to provide MDA services will need to apply for a licence variation to include this authorisation.
We have outlined below some important points for you to consider when applying for a licence variation to include MDA services:
If you require assistance with preparing, reviewing or submitting your licence variation application, Holley Nethercote Commercial & Financial Services Lawyers’ associated compliance business, Compact Compliance & Training, can assist. We have been helping industry participants’ transition into an MDA-licensed regime, and would welcome current licensees who offer MDA services to contact us, or the authors directly, to discuss your needs in relation to licensing and documentation updates.
- Act fast: ASIC has indicated that it is pushing out its decision time frames for 90% of applications from 3 months to 8 months. Licensees applying to add MDA services will need to ensure that they treat the application process seriously by submitting quality applications and in a timely manner to avoid any disruptions in the assessment process.
- Consider the cost: advisers should consider new ASIC Fees-for-Service Regulations being proposed by Treasury. Current fees to vary an AFS licence are approximately $300. Fees proposed by Treasury may see the cost of a variation application increase substantially from 1 July 2018.
- Your experience: ASIC will allow transitioning licensees to count their experiences in operating under the no-action letter as relevant Responsible Manager experience for the licence variation.
- Be prepared: in addition to the requirement to be appropriately authorised, there are new disclosure and reporting obligations that will require changes to existing documentation.
An extended version of this article was featured in the iMap Perspectives magazine: Autumn 2018 edition (page 10).
Authors: David Court (Partner), Holley Nethercote Commercial & Financial Services Lawyers and Frank Varga (Licensing Specialist), Compact Compliance & Training.