Government MIS Review to include Property Funds

The Albanese government has announced a review of the Managed Investment Scheme (MIS) framework, and has already flagged the review will scrutinise property funds.

There is potential for significant impact to the funds management industry, however the terms have not yet been released.

The review was announced in the budget last year, and a Treasury announcement this March revealed some high level detail about what the review will cover.

Treasury’s media release said: “The review 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).”

Property funds should take particular note of the last point (highlighted for emphasis by PFA).

A consultation paper is expected to be released mid-year. The Property Funds Association of Australia’s Issues and Regulatory (IRC) Committee will consider whether a submission on behalf of PFA is required when the consultation paper is issued.

For questions about regulatory issues please contact PFA at - pfa@propertyfunds.org.au