Treasury to review MIS regulatory framework

The review, according to a statement by Financial Services Minister Stephen Jones, will examine whether the regulatory framework is fit-for-purpose, identify potential gaps, and consider what enhancements can be made to reduce undue financial risk for investors.

It will consider reform options, focusing on:

• whether the thresholds that determine whether an investor is a retail or wholesale client remain appropriate;
• whether certain MIS investments should be able to be marketed and sold to retail investors;
• the various roles and obligations of responsible entities and whether the governance, compliance, and risk management frameworks for MIS are appropriate; and
• interactions between Commonwealth and state laws when regulating real estate investments by MIS (including issues arising in relation to the failure of the Sterling Income Trust).

Treasury will also consider:

• whether “investor rights” for people who invest in MIS are appropriate;
• liquidity requirements for MIS; and
• whether an insolvency regime is required for MIS.

“The regulatory framework for MIS was introduced more than 20 years ago, since that point, we’ve seen a number of significant scheme failures, including the Sterling Income Trust, Trio Capital, and Timbercorp,” Mr Jones said.

He noted that as part of the review, Treasury will consider the recommendations by various bodies, including the former corporations and markets advisory committee and the parliamentary joint committee on corporations and financial services. 

Treasury is scheduled to release a public consultation paper by mid-year and consult with industry before reporting findings to government by early 2024.