ASIC has released Report 291 Custodial and Depository services in Australia (REP 291) following a number of high-profile collapses in the financial services industry, including Trio Capital.
The report reviews the Australian custodial industry and the current regulatory framework.
It identifies key risks to the safety of third party client assets and recommends some matters of ‘good practice’ that custodians and responsible entities may need to consider to ensure the safety of investment assets.
ASIC has highlighted key aspects of ‘good practice’ relating to
- unauthorised debiting of omnibus accounts
- stability and safety of IT systems
- operational risks created by manual and disparate systems
- whistleblowing culture and framework
- reporting in relation to suspicious third party valuations
- breach reporting relating to custodial and investment administration services, and
- the risks inherent in corporate actions such as share buy-backs and rights issues.
Separately, ASIC will issue a consultation paper on proposed changes to the financial resource requirements of custodians in the near future.
ASIC is also proposing to require responsible entities and other financial product issuers to provide clearer disclosure about the role of custodians in retail marketing material, including product disclosure statements (PDS).
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Posted 9th July 2012 by David Jacobson in Corporations Act