In this update we cover two more important Australian developments for fund managers in light of the COVID-19 pandemic:
- an announcement from the Treasurer of a six months’ delay to the implementation of the Banking Royal Commission reforms consulted on in Jan-Feb 2020; and
- an announcement from the Australian Securities & Investment Commission (ASIC) of a six months’ delay to the commencement of the design and distribution obligation (DDO) reforms.
Six months delay to the implementation of certain Royal Commission reforms
On 8 May 2020, the Treasurer announced that the implementation of certain reforms recommended by the Banking Royal Commission and which were consulted on in Jan-Feb 2020 will be delayed for six months due to the impact of COVID-19 on the financial services industry. The reforms impacted by the delay include those relating to:
- significant breach reporting; and
- superannuation trustee separation.
This delay applies to reforms which had been proposed to take effect in July and December this year. The commencement dates in the exposure drafts of the legislation will be updated accordingly.
Six months delay to commencement of the DDO reforms
On 8 May 2020, ASIC announced that it would defer the commencement date of the DDO reforms for six months due to the impact of COVID-19 (20-109MR). The commencement date for the DDO reforms is being extended from 5 April 2021 to 5 October 2021. The DDO reforms impose significant new obligations on product issuers and product distributors to design and distribute products which are likely to be suitable for clients in the target market.
While the reforms have been deferred “so industry participants can focus on immediate priorities”, ASIC has made clear that it expects fund managers to “continue preparing for commencement on the extended timeline”.
The contents of this publication are for reference purposes only and may not be current as at the date of accessing this publication. They do not constitute legal advice and should not be relied upon as such. Specific legal advice about your specific circumstances should always be sought separately before taking any action based on this publication.
© Herbert Smith Freehills 2020