The Minister for Financial Services and Superannuation, Bill Shorten, today welcomed the release by the Australian Securities and Investments Commission (ASIC) of its consultation paper Debentures: Reform to Strengthen Regulation.
ASIC's consultation paper is the first step in implementing the Government's roadmap for strengthening the regulation of finance companies that issue debentures to retail investors, announced by Mr Shorten on 22 December 2012.
The consultation paper outlines ASIC's proposals for:
- mandatory minimum capital and liquidity requirements for retail debenture issuers that on-lend;
- strengthening ongoing disclosure to investors on the financial performance of debenture issuers that on-lend;
- enhancing the powers and duties of trustees to monitor the financial performance and disclosures of retail debenture issuers; and
- clarifying the reporting arrangements between auditors of debenture issuers and debenture trustees.
"I strongly encourage stakeholders in the debentures sector to engage in ASIC's consultation process. These consultations will allow the Government and ASIC to assess the impact of the proposals on industry, including transitional arrangements, before making a final decision on the most appropriate future regulatory framework for the industry," Mr Shorten said.
The Australian Prudential Regulation Authority (APRA) will also be undertaking consultation in the first half of 2013 on the final element of the roadmap, relating to restricting the ability of issuers to offer 'at call' investments and using certain 'bank-like' terms to describe their products.
The consultation paper is available on the ASIC website.