Powered by MOMENTUM MEDIA

ASIC provides relief for litigation funders

By Sarah Kendell
 — 1 minute read

The corporate regulator has released guidance around how funders of class actions will fit into the financial services licensing regime that it hopes will “address industry concerns about the workability” of the government’s moves to further restrict litigation funding.

ASIC’s Consultation Paper 345 on litigation funding schemes outlined several areas where it proposed to provide relief for litigation funders from aspects of the managed investment scheme regime that they currently fall under.

The requirement for litigation funders to hold an AFSL came into place in August last year after a surprise announcement from the government in mid-2020, but ASIC has been providing transitional relief for funders from aspects of the regime that are due to expire in April 2022.

Advertisement
Advertisement

The reforms were the subject of a parliamentary inquiry in December that made 31 recommendations in relation to legislative changes to litigation funding, and the government has said it will further consult on these recommendations this year.

ASIC’s paper sets out “definitional guidance for key terms in the MIS regulatory regime as they apply to litigation funding schemes”, as well as granting relief from equal treatment duty in relation to MIS distributions, so that this rule does not apply to distributions of a settlement or judgment sum obtained in connection with a litigation funding scheme.

The paper also proposes to permanently extend relief for litigation funders from the dollar disclosure provisions for MIS in relation to certain commercially sensitive information.

“ASIC is inviting feedback from industry participants and stakeholders about whether the proposed guidance is necessary and adequate, and whether the proposed relief addresses industry concerns about the workability of the MIS regime for litigation funding schemes,” the regulator said.

“In administering the AFSL and MIS regimes for litigation funding schemes, ASIC aims to give effect to the government’s policy intent [and] facilitate the effective operation of the legislative framework by ensuring the workability of the regimes and promoting commercial certainty about their operation.” 

The regulator said it would consider any developments following the government’s consultation on the recommendations in the final report from the parliamentary joint committee, and “reassess its approach” to matters in the consultation paper if necessary.

 

The ifa Excellence Awards are back in 2021 and nominations are now open! This prestigious accolade recognises exceptional professionals within the financial advice industry, shining a light on the outstanding achievements from the nation's best and brightest. If this sounds like you or someone you know, then nominate today for the ifa Excellence Awards 2021!

 

ASIC provides relief for litigation funders
investordaily image
ID logo

 

related articles

Website Notifications

Get notifications in real-time for staying up to date with content that matters to you.