All managed discretionary account (MDA) providers must now have an Australian financial services (AFS) license, with an MDA-specific ‘dealing by issue’ licence authorisation, Australian regulator ASIC announced earlier today.
From today, MDA providers who do not have the required AFS license authorisations must cease providing MDAs until they have obtained those authorisations.
An MDA is a facility where client portfolio assets are managed on an individual basis by an MDA provider at the MDA provider’s discretion (subject to any limitation agreed with the client). MDAs are often used by financial advisers and varying terminology is used to refer to these products, such as separately managed accounts, individually managed accounts, investment advisory programs or managed discretionary portfolio services.
ASIC gave notice of the revised AFS license requirements in September 2016. Since then, 59 AFS licensees have applied for authorisation to operate as an MDA provider to transition and there are 244 licensees who have an MDA specific ‘dealing by issue’ authorisation.
ASIC will undertake reviews to check that MDA providers hold the relevant AFS license authorisations and will take action if unlicensed activity is identified.
The complete announcement can be seen here.