THE WRAP - AUGUST 2014

As we go to print on this edition of THE WRAP, the industry continues to digest a mix of developing regulatory and market related issues. Some of these have been brought to the fore in the interim report issued by the Financial System Inquiry. Other issues are connected to continuing regulatory reform agendas such as changes to the financial advice laws and Australia’s role in the Asia-Pacific region as a key financial services player. A further dimension has been placed on the reform process by the recomposition of the Senate and what that means for the enactment of new laws.

In this edition of THE WRAP, we take a look at some of these developing issues and bring a focus on both regulatory and business trends affecting wealth management businesses:

  • The proposed rules for the Asia Region Funds Passport have been released. We ask 3 key industry players their views on whether the shape of the current proposals need to be changed in order to maximise the chances of success
  • Financial services providers are increasingly using technology to engage with their customers across an array of digital channels. We chart the developments in this space and consider the associated risks and opportunities from a legal and regulatory perspective
  • In light of the recent signing of the intergovernmental agreement between Australia and the United States, we work through the impact this will have on reducing the compliance burden on Australian financial institutions
  • The managed investment trust tax concessions are proving to have appeal to foreign investors. We untangle the criteria which need to be satisfied in order for an investment vehicle to qualify and the targeted tax outcomes to be achieved
  • Life insurers are using pre-existing medical condition exclusion clauses more often and in a wider range of life policies. The case law in this context needs to be navigated carefully and we explain how insurers should take care in how they rely on such clauses
  • Reforms to the OTC derivatives markets are being implemented in Australia. We set out the transitional rules and which institutions may be caught within the new requirements, which include transaction reporting.

We may not quite be there yet on implementation of a number of the continuing reform pieces. Partly this is a consequence of embedded transitional arrangements, which in some instances span years. Also, there has in some cases been a revisiting of policy settings, perhaps most notably through the amendments to the Future of Financial Advice laws.

Regardless, businesses will not be given the grace of ignoring these changes. As business confidence and activity increases, regulatory change may need to be accepted as a prevailing feature of the new environment or a “new normal”. It will be those businesses with the agility to adapt systems and operations to fit with changing settings which will stand greater chances of success. Equally, those which are not able to respond may find legal and regulatory risk in not facing up to the changes.

Nikki Bentley

I understand the financial services industry and thrive on helping our clients in this industry succeed.

Nikki Bentley Partner

Nikki is the Group Leader of Henry Davis York's Corporate Group, which includes the legal teams for Corporate / Mergers & Acquisitions; Investments & Financial Services and Tax.

Nikki is a leading investment funds advisor specialising in financial services and corporate law.  She specialises in business establishment and structuring, fund establishment, funds merger and acquisition, product disclosure and distribution. Nikki leads HDY's corporate group which combines expertise from the Financial Services, M&A and Tax areas.

Nikki provides advice to leading Australian and global fund managers on a full range of corporate, commercial and regulatory issues facing their businesses. She has considerable experience in assisting clients with fund establishment (onshore and offshore), disclosure and distribution. Nikki regularly advises clients on establishing, buying, selling and restructuring their businesses. She also regularly assists clients responding to regulatory enquiries and investigations.

With more than 15 years funds management experience in private practice, government and as an in-house lawyer, Nikki's practice spans the range of funds management products, with particular expertise in hedge funds, property funds and equities.

Nikki is regularly involved in industry and government discussions on regulatory reforms impacting the Australian funds management industry. Nikki is a passionate advocate for the development of a new corporate collective investment vehicle because of the opportunities it could provide to grow the funds management industry. She is the Honorary Legal Counsel and Chair of the Regulatory Committee for the Australian branch of the Alternative Investment Management Association (AIMA) and is a regular participant on the Financial Services Council (FSC) working groups.

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Jon Ireland

I constantly strive for technical excellence and commercial outcomes that add real value for my clients.

Jon Ireland Partner

Jon has extensive experience in corporate and financial services law, specialising in complex transactions, funds management and investment distribution. Jon also advises on regulatory issues relating to the use of technology in financial services.

Jon provides advice to leading Australian and international financial services clients on the full range of corporate, commercial and regulatory issues facing these businesses. He has considerable experience advising them on establishing, buying into, selling and restructuring their businesses.

Jon regularly advises on funds management issues including fund structuring, disclosure, investment management and outsourcing arrangements. He has particular expertise in the area of investment distribution and has advised on key projects for platform operators and advice providers.

Recently, Jon has advised on the establishment of a fully digital investment platform, the negotiation of a material outsourcing arrangement for a global investment bank and a scheme modernisation project for a leading Australian fund manager. Jon has also recently advised on the establishment of the Australian operations of a global diversified financial services business, including regulatory and corporate issues related to its expansion.

Jon's clients value his advice on recent law reforms, including around product disclosure statements and the digital provision of financial services. Jon is consulting to the Committee for Sydney and is a regular participant on Financial Services Council working groups.

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Greg Reinhardt

Expert advice delivering commercial solutions.

Greg Reinhardt Partner

Greg is the Head of our Tax practice and is a recognised specialist in taxation law, advising clients across a range of industries in relation to income tax, GST, stamp duty and other state taxes.

Greg has particular expertise advising clients in the financial services sector, including managed investment funds, derivative markets, insolvency and restructuring.

He advises public and private companies, investment funds, foreign corporations and banks in respect of the tax implications of mergers and acquisitions, disposals, corporate restructures, property and infrastructure projects, financing and leasing arrangements, international taxation, financing transactions, property and infrastructure projects, managed investment schemes and other collective investment vehicles (CIVs) and tax due diligence as well as the establishment of new businesses in Australia.

Greg has published a number of articles on taxation law issues, particularly on the topic of making Australia a financial services hub, and is a regular speaker at conferences.

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Jim Koutsokostas

I am determined. Success is not just finding the correct answer – it is achieving the right outcome.

Jim Koutsokostas Senior Associate

Jim specialises in taxation law and has over 10 years' experience providing taxation advice on a broad range of corporate and trust tax matters with a particular focus on the banking and finance, property and construction sectors.

Jim's practice extends to all areas of taxation law. Having advised a number of publicly-listed and large private clients on a range of matters, he has gained experience in interpreting highly technical tax law and rulings and providing advice on complex transactions.

Jim has been involved in advising on the tax aspects of securitisation structures, development and lease agreements, property sale contracts, structured retail financial products, and collective investment vehicles including managed investment trusts.

In addition, he has advised on the tax aspects of cross-border transactions, onshore and offshore fund establishment, as well as property and infrastructure projects. He has also advised domestic and foreign financiers on the direct and indirect tax aspects of transactions with respect to distressed entities.

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