The Ministry of Business, Innovation and Employment (MOBIE) has proposed more flexible multi-manager fund disclosure options in the latest round of Financial Markets Conduct (FMC) regulatory consultation.
Under MOBIE’s ‘Supplementary Financial Markets Conduct Regulations’ proposals, as underlying changes occur multi-manager schemes could use fund updates in addition to an original product disclosure statement (PDS) or issue an ‘alternative PDS’ that covered up to five underlying funds.
“The alternative PDS would be optional for issuers to use in place of the current managed fund PDS,” the MOBIE document says. “Its purpose would be to give issuers greater flexibility about how to combine their funds in a point-of-sale offer document and (for issuers with multiple funds) potentially limit the need for multiple PDSs.”
However, MOBIE says that with the “complexities in the current regulations around the disclosure of managed funds”, its proposed alternative PDS would require further input from industry.
Amongst a raft of other proposals, the MOBIE document also clarifies disclosure rules for “multi-fund investment options”, including life-cycle funds.
“The key purpose is to ensure that investors obtain meaningful reporting,” MOBIE says. “This needs of course to be balanced by the cost of providing reporting across fund.”
As well as “tailoring” multi-manager disclosure regulations, MOBIE is also seeking feedback on: short-form disclosure for new shares (or other product) offers that rank the same as existing quoted products; convertible financial product disclosure; managed investment scheme debt disclosure; financial information relief on acquired businesses, and; disclosure for multi-employer and defined benefit schemes.
Roger Wallis, Chapman Tripp chair, said the MOBIE proposals fall into the “fine-tuning” category.
For example, Wallis said the FMC regulatory exposure draft makes it clear that multi-employer superannuation schemes only have to produce only a single PDS with employer-specific updates where necessary.
He said the MOBIE document also confirms defined benefit super schemes do not have to provide fund updates to members.
“The government has been pretty good at consulting with the industry to make sure [FMC regulations will work,” Wallis said. “The industry is not getting any surprises… and that can be a good thing sometimes.”
Submissions on the MOBIE proposals are due by July 2 this year.