PFA Members - IRC Update July 2021

Notes from ASIC meeting – ASIC Recurrent Data Project set to commence soon

ASIC has invited PFA to participate in its Recurrent Data Project (RDP) Reference Group, and PFA representatives attended a recent briefing in early April.

Following a successful RDP pilot project in 2019, ASIC is ready to consult with industry and expand the program. Recurrent data collection is a key strategy of ASIC and other regulators and also overseas. The aim is to collect more granular information and more frequent data to be more efficient and manage significant risks.

Achieving this will involve regular collection of information, which will be published.

The RDP will commence with retail products but ASIC also intends for it to cover the wholesale market at a later stage.

ASIC acknowledges the data collection may involve some burden on fund managers, but encourages feedback on how it might be made easier – aside from setting up the reference group, ASIC will open the RDP to public consultation.

The RDP is expected to run for several years, commencing around June 2021.

Better market information
ASIC believes there is a need to publish better market information about managed investment schemes, which it says will benefit the industry. Recurrent data will also improve evidence based decision making by the regulator.

ASIC says Australian managed funds data currently lags global best practice. Overseas regulators do collect recurring data and publish: for example, the New Zealand Financial Markets Authority collects data from MIS’s and publishes on a consumer website; APRA also has superannuation data collection and ASIC thinks MIS information is required as a counterpart.

ASIC wants to fill information gaps and provide better evidence base for policy decisions. Benefits to stakeholders including investment managers include the ability to better asses the industry, and improve competition and product offerings making it easier for consumers and advisers to understand products. The information will also be available to other government stakeholders, like the RBA, and improve reporting to global regulators.

Data dictionary
A ‘data dictionary’ provides the basis of data collection, including the required fields and format. ASIC has revised its data dictionary based on feedback from the pilot, and it is still being finalised. It is expected to provide comprehensive information on funds including fund attributes, key service providers used, investments, asset allocation, benchmarks, mortgage scheme specific information, currency exposures, information regarding derivatives, leverage and so on.

ASIC says it has worked closely with APRA regarding its data dictionary, for comparison purposes and to understand what works and what the impacts are for the industry.

Industry impact and feedback
The RDP Reference Group will provide important feedback to ASIC regarding the impact to industry – ASIC welcomes any feedback including insights on the costs and the benefits to industry when balanced with the policy of implementing this project. They are conscious from pilot that it will take time and could involve considerable cost to industry and want to get more information about this.

ASIC has also spoken to other government departments to get a sense of what data they need that could be collected. ASIC has also engaged at IOSCO (International Organization of Securities Commissions) level: they are doing work on leverage in funds and associated risks, and there is an expectation that ASIC will be part of that process and provide data on leverage. Recurrent data is needed as part of the process.