The federal government has announced it will introduce the third element of its Investment Manager Regime (IMR) to parliament in the first half of 2013, a move commended by the Financial Services Council (FSC).
Minister for financial services and superannuation Bill Shorten said the third element will "make legislative amendments to allow funds to trace through to underlying investors for the purposes of applying the widely held and concentration tests."
Under current integrity provisions, funds must have a minimum of 25 members, but some funds, which use "feeder fund" structures with large numbers of underlying members, are currently inappropriately excluded, Shorten stated. The new changes will mean underlying investors will also count towards meeting qualification requirements.
FSC chief executive John Brogden said the changes will give clarity to foreign funds that use the "feeder fund" structure. "This will assist in attracting foreign managed funds to utilise Australia's highly-skilled funds managers," he said.
But the funds management industry still needs policy changes to be developed around collective investment vehicles to become more globally competitive, according to the FSC. In October, the FSC highlighted a report it released with The Trust Company, showing 26 per cent of cross-border investment flows into Australia were from collective investment vehicles, such as sovereign wealth funds and pension funds.
"Our Cross Border Flows report shows that where the government has taken action to increase the competitiveness of taxation policy applied to Australian domiciled funds, fund flows have substantially increased," Mr Brogden said.
"It is critical that the government maintains the momentum through effective policies so Australia can capitalise on growth opportunities in financial services," he said.
