16 April 2018

Deadline is fast approaching for MDA service providers!

Holley Nethercote


Holley Nethercote Lawyers offers preventative law services with deep regulatory expertise. Holley Nethercote Compliance provides non-legal services through HN Training, HN Hub, HN Licensing, HN Documents, and HN Policy to keep clients compliant.
As of 1 October 2018, advisers who wish to continue to provide MDA services will need to apply for a licence variation.
Australia Finance and Banking
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If your business operates a Managed Discretionary Account (MDA) service through a regulated platform and has been relying on the "no-action" letter, this is a reminder that changes are happening and with little time remaining.

ASIC's 2016 amendments to its Managed Discretionary Accounts policy included the removal of its no-action letter position for those advisers who provided an MDA on a regulated platform holding a limited power of attorney. Many advisers took advantage of this no-action letter as it meant no licence variation was required. However, as of 1 October 2018, those advisers who wish to continue to provide MDA services will need to apply for a licence variation to include this authorisation.

We have outlined below some important points for you to consider when applying for a licence variation to include MDA services:

  • Act fast: ASIC has indicated that it is pushing out its decision time frames for 90% of applications from 3 months to 8 months. Licensees applying to add MDA services will need to ensure that they treat the application process seriously by submitting quality applications and in a timely manner to avoid any disruptions in the assessment process.
  • Consider the cost: advisers should consider new ASIC Fees-for-Service Regulations being proposed by Treasury. Current fees to vary an AFS licence are approximately $300. Fees proposed by Treasury may see the cost of a variation application increase substantially from 1 July 2018.
  • Your experience: ASIC will allow transitioning licensees to count their experiences in operating under the no-action letter as relevant Responsible Manager experience for the licence variation.
  • Be prepared: in addition to the requirement to be appropriately authorised, there are new disclosure and reporting obligations that will require changes to existing documentation.

The content of this article is intended to provide a general guide to the subject matter. Specialist advice should be sought about your specific circumstances.

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