Global Trustee and Fiduciary Services Bite-Sized Issue 6 2023
Bite-Sized | 2023 Issue 6 13 QUICK LINKS AIFMD ANTI-MONEY LAUNDERING CMU — RETAIL INVESTMENT PACKAGE CBDC COSTS & CHARGES CRYPTOASSETS ELTIF IFD/IFR LIBOR TRANSITION MIFID II/MIFIR MONEY MARKET FUNDS OPERATIONAL RESILIENCE SUSTAINABLE FINANCE/ESG WHISTLEBLOWING AUSTRALIA EUROPE LUXEMBOURG NORTH AMERICA UNITED KINGDOM The FCA will: • Provide whistleblowers with more detail on what has been done with the information provided, or reasons for taking or not taking action; • Improve the use of whistleblowers’ information across the FCA (e.g., making the best use of data and ensuring that end-to-end whistleblowing processes are as efficient as possible); • Enhance its webform — which is the most popular way for whistleblowers to contact the FCA — to fully capture every whistleblower’s disclosure; and • Engage with the Department for Business and Trade to support a review of whistleblower legislation to enhance the wider whistleblowing system The FCA’s ability to share information about how it has acted on the information provided by whistleblowers is often restricted by legal confidentiality obligations. The FCA’s revised approach will provide as much information as possible within these legislative constraints. Link to Whistleblowing Data here AUSTRALIA ASIC Calls on Investment Product Issuers to ‘lift their game’ on Design and Distribution Obligations On 3 May 2023 the Australian Securities & Investment Commission (ASIC) published Report 762 Design and distribution obligations: Investment products (REP 762) following an initial, risk-based, review of how investment product issuers are meeting the design and distribution obligations (DDO). The DDO requires financial products to be designed and distributed with clear and contemporary consideration of the objectives, financial situation and needs of the consumers and retail investors being targeted. The review found that a significant number of the product issuers made deficient target market determinations (TMDs), with poorly defined target markets and unclear or inadequate product governance arrangements. ASIC prioritised the initial review of investment products because of concerns that investors were being inappropriately exposed to high-risk products. The key target market deficiencies ASIC identified across investment product issuers include: • Target markets defined too broadly; • Unsuitable investor risk profiles used; • Inappropriate levels of portfolio allocation used; and • Unsuitable investment timeframes and/or withdrawal features, not reflecting the product’s risks and liquidity profile. ASIC also identified inappropriate, or no, distribution conditions. Many of these deficiencies appeared when issuers relied on TMD templates without customising them appropriately. ASIC also reviewed the product design arrangements of 12 issuers of around 640 registered managed investment schemes to check how they met the ‘reasonable steps’ and TMD review obligations. ASIC found a prolific use of investor questionnaires to meet the ‘reasonable steps’ obligation without a clear underlying governance and distribution framework. While all issuers had arrangements to meet their TMD review obligations, they needed to use review triggers more effectively and improve their processes upon a review trigger. Link to the Report here
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