The proposals respond to ongoing governance concerns and recent high-profile scheme collapses, most notably the Shield Master Fund and the First Guardian Master Fund. Together, they placed more than $1bn of investor funds at risk. The Australian government is considering reforms aimed at reducing consumer harm, strengthening responsible entity (RE) accountability, and improving Australian Securities & Investments Commission’s (ASIC) visibility over scheme activities, superannuation switching, and sector-wide risks. Treasury is seeking feedback on these proposals, with submissions due by 27 February 2026.

The paper sets out 6 consultation points for feedback from the industry

1. Strengthening the compliance framework

• Stricter compliance plan requirements, including detailed scheme descriptions and significant risk controls.
• Liability for compliance plan breaches limited to material contraventions.
• Mandatory use of existing audit and assurance standards for compliance plan audits.
• REs to notify ASIC of appointment or resignation of compliance committee members.

2. Majority of external directors on responsible entity boards

• RE boards would be required to have a majority of external directors, eliminating the alternative option of a mandatory compliance committee.

3. Prohibition on related‑party transactions (with limited exceptions)

• REs would be prohibited from investing in or lending to related entities unless an exception applies. This responds directly to identified misconduct in past MIS failures.
• A potential solution outlined would be to outsource the RE function such that it is independent of the investment manager.

4. New framework for financial resource requirements

• ASIC considering higher net tangible asset (NTA) requirements.
• Treasury is seeking feedback on whether these requirements should be set out in legislation rather than in ASIC instruments.

5. Increased ASIC MIS data collection powers

• New recurrent and event‑based data reporting to address current gaps in MIS‑level visibility.

6. Alerts to ASIC about superannuation switching

• Mandatory alerts from superannuation trustees regarding suspicious switching activity, aimed at early detection of misconduct.

Who is impacted

How SW can help

SW brings deep financial services expertise with a strong focus on funds management and regulated investment structures. We work closely with responsible entities, investment managers, and trustees to navigate complex regulatory change and evolving governance expectations.

Our team can assist in assessing the impact of the proposed reforms on your governance framework, board composition, compliance plans, and related party arrangements. We also advise on financial resource requirements, capital implications, and enhanced reporting obligations, helping you strengthen risk management and internal controls in line with heightened regulatory scrutiny.

With integrated audit, assurance, risk, and advisory capabilities, we provide practical, commercially focused guidance to help you respond effectively to these reforms.

Contributor

James Serpell

The post Enhancing safeguards & governance in the managed investment scheme sector appeared first on SW Accountants & Advisors.

The central objective of this review is to evaluate the adequacy and relevance of the existing regulatory structure, pinpoint regulatory gaps, and explore improvements to mitigate unwarranted financial risk exposure for investors.

The review is part of the Government unveiled plans for Treasury to conduct a review of the regulatory framework governing MIS, in the October 2022‑23 Federal Budget.

Focus of the MIS review

The review will focus on the following current regulation areas:

• criteria of investor’s wholesale client status
• responsible entities’ roles and obligations.

The criteria establishing an investor’s wholesale client status

The criteria for a wholesale client is currently under review. Chapter 7 of the Corporations Act 2001 contains several tests in relation to specific products.

Current thresholds for establishing wholesale investor status include:

• where initial amount paid by investor at time of investment is at least $500,000 or
• a qualified accountant provides a certificate which states that the client’s
  • net assets are equal to or exceed $2,500,000 or
  • gross income for the last two financial years is at least $250,000 per annum.

Responsible entities’ roles and obligations

A key focus area of the review is the governance of the scheme. Effective governance demands ongoing vigilance for transparency and accountability.

Ensure you are aligned with current standards and practices within the Australian financial sector. It is crutial to adapt governance practices to match evolving regulations through consistent regulatory monitoring, and seek guidance from legal and regulatory specialists.

You can find the announcement detailing the primary issues under review here.

Make sure you’re ready

Each MIS provider should assess the impact on their business. The outcome of the consultation could alter the type of license needed to maintain current distribution.

MIS providers are advised to consider reviewing the consultation paper and their investor thresholds. Each case is different, we can provide expert advice that is right for your business.

How SW can help

The SW team has deep financial services sector experience, and specialises in funds management. We can provide you with the right guidance to assess the regulatory changes and their impact to your business.

Contributors:

Gail Makone

James Serpell

The post Managed Investment Scheme consultation underway  appeared first on SW Accountants & Advisors.