MDA service to confront ASIC regulations, firm says

In preparation for ASIC’s regulatory changes to managed discretionary account (MDA) services, Managed Accounts Holdings Limited (MGP) has launched a non-custodial MDA solution in an attempt to help advisers operating a Limited MDA arrangement “meet tougher conditions”, the company announced in a statement yesterday.

According to ASIC’s review, the main changes some MDA operators will have to grapple with include: enhanced capital requirements, increased disclosure requirements and the withdrawal of the non-action letter.

MGP said the proposed changes presented a unique opportunity for the company to assist advisory firms that want to build and manage bespoke client portfolios in a compliant and efficient manner.

MGP chairman Don Sharp said: “MGP has been designing and implementing a direct ownership solution which will enable the existing MGP operating model, technology and administration system to exist without the need for assets, particularly ASX-listed securities, to be held in custody.”

MGP chief executive David Heather said: “Our offering is filling a gap in the market for a customised MDA service that enables advisory firms to manage portfolios internally, deliver a consistent client experience and the same high level of service across their client base."

Looking ahead, Mr Heather cited research which suggests the managed account market in Australia is forecast to hit $60 billion in FUA by 2020, driven by investor demand for more flexible, transparent and competitive solutions.

ASIC began its review of MDA services back in 2013 and is set to announce the outcomes this September, MGP said. All proposed changes are documented in ASIC's CP200 paper.