ASIC is consulting on proposals contained in Consultation Paper 199 Debentures: Reform to strengthen regulation (CP 199)

The consultation paper outlines ASIC’s proposals for:
•mandatory minimum capital and liquidity requirements for retail debenture issuers that on-lend;
•requiring retail debenture issuing lenders to provide a prospectus to existing retail investors who make further debenture investments (including rollovers of existing investments);
•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.

ASIC is proposing a four year transition period for these requirements.

APRA will separately consult on proposed reforms to more clearly differentiate debenture issuers from banks, building societies and credit unions that are prudentially regulated. This includes a proposal to prohibit debenture issuers from using terms like ‘deposit’ and a proposal to restrict ‘at-call’ accounts by imposing a minimum maturity period.

Following consultation, the Government and regulators will make a final decision on the new framework, including transitional arrangements.