The revised guidance is set out in Regulatory Guide 133, titled Managed Investments and Custodial or Depository Services: Holding Assets and applies minimum standards to asset holders for managed investment schemes and holders of financial products.
The new guidance will affect responsible entities, licensed custodians, platform operators and managed discretionary account operators.
It ensures agreements made with asset holders have certain minimum terms and it requires primary production scheme responsible entities to safeguard the land on which the scheme operates.
The regulatory guide had been anticipated by many in the custodial industry as reported by InvestorDaily last week.
The new requirements will apply to any new assets being held by custodians from January 2014. Otherwise asset holders will have until January 2015 to comply with the new requirements and until November 2015 to ensure agreements with asset holders comply with the changes.
ASIC commissioner Greg Tanzar said the updated policy responds to the emerging risks and challenges that have resulted from major changes impacting the managed investment scheme and custodian industries.
“It will also help ensure that all asset holders meet appropriate standards in an area where assets under custody have reached around $2.16 billion at 30 June 2013,”said Mr Tanzar.
ASIC sought feedback about the impact of its proposals through a consultation process, before constructing the regulatory guide.
It noted that most of the submissions it received were concerned about cost.
According to ASIC, however, the costs of the new requirements for major custodians would be minor.
ASIC stated in the regulatory guide that while some of the new requirements may have a more proportionate impact on smaller custodians and entities, it did not expect the revised regulatory approach to result in major costs for the industry.
It said the new regulation may have a net benefit, as it may reduce the risk of failure in the custodial industry.
“This would reduce any reputational damage to the industry as a whole, by ensuring asset holders have adequate capacity and competency to conduct their financial services businesses,” ASIC stated in the regulatory guide.
