Australia’sFinancial ServicesCouncilSettingStandardsfor theFinancialServices Industry

WHO IS THE FSC AND WHAT DO YOU DO?

The Financial Services Council (FSC) is a peak body which sets mandatory Standards and develops policy for more than 100 membercompaniesinAustralia’slargestindustrysector,financial services.

Our Full Members represent Australia’s retail and wholesale funds management businesses, superannuation funds, life insurers and financial advisory networks.

The financial services industry is responsible for investing more than $3 trillion on behalf of more than 15.6 million Australians. The pool of funds under management is larger than Australia’s GDP andthecapitalisationoftheAustralianSecuritiesExchangeandis the fourth largest pool of managed funds in the world.

WHY INVEST IN AUSTRALIA?

Australia is a stable and low-risk destination for investment, thanks to our resilient economy, dynamic industries, stable legal andpoliticalframework,andstrongtradeandcapitaltieswiththe world.

Australia has a diverse and highly skilled funds management industry, that invests both domestically and into global markets. The industry’s growth has been underpinned by the growth in domestic superannuation (pension) investment, with $AUD4.31 trillion in funds under management, up from $AUD3.81 trillion in June 2020.

WHAT ARE THE REASONS THAT GIVE INVESTORS EASE IN AUSTRALIA?

Australia offers a wealth of investment opportunities in resources and energy, defence, advanced manufacturing and space; digital technologies, agribusiness and food, health, and infrastructure. Our stable political situation and legal system, and resilient economy (Australia performed relatively better than most G20 economies coming out of the global financial crisis and COVID-19 pandemic) make Australia an attractive, low risk destination for investment.

WHAT ARE SOME CURRENT POLICY SETTINGS CAN YOU TELL OUR READERS ABOUT?

The FSC supports policy setting principles that enhance market integrity and efficiency, promote sound corporate governance practices and maintain and increase consumer confidence in the funds management industry.

Asanexample,in2022theAustralianGovernmentestablished the Corporate Collective Investment Vehicle (CCIV) regime. A CCIV is a new type of company for investment managers, which is limited by shares. A CCIV is an umbrella investment vehicle that is comprised of one or more sub-funds (with segregated assets and liabilities referable to each sub-fund) and is operated by its single corporate director.

The CCIV framework offers an opportunity to showcase Australia’s investment expertise and grow the funds management sector, as a key contributor to Australia’s GDP and as an export industry.

WHAT WEALTH MANAGEMENT EXPERIENCE DOES THE FSC OFFER?

In the wealth management sector, the FSC’s mission is to assist our members achieve policy setting principles that:

• Enhance the effectiveness, efficiency and adequacy of the superannuation system

• Maintain and increase consumer confidence in superannuation and fund managers

• Improve levels of engagement and financial literacy

• Promote competitive neutrality and competition in the industry

• Engender trust and confidence in the financial advice profession

• Place the interests of consumers first.

Wedothisbycontinuouslyengaginginadvocacyconcerning the development of the social, economic and regulatory framework in which our members operate, thereby helping them to better serve their clients and customers.

The FSC also focuses on assisting members with regulatory compliance, by bringing together industry experts to resolve common regulatory issues and reduce the cost of implementing regulation.

HOW DOES THE FSC INNOVATE?

The FSC’s focus is to lead public policy debate for the benefit offinancialservicesconsumersandsupportourmembersas they innovate and grow their business to better serve their customers.

In the funds management space, the FSC is developing new artefacts to help the industry innovate and strengthen its compliance processes, including preparing a CCIV Constitution template for industry to use in preparing documentationfornewCCIVstructures.Providingatemplate CCIV Constitution for use by both new market entrants and established funds will allow our members to save on legal and transactional costs.

The FSC also developed Target Market Determination templates to help members comply with the Design and Distribution Obligations reforms. These templates have become the industry standard and have reduced costs for membersbycreatingindustryconsistencyandacompliance baseline.

HOW DOES THE FSC DEAL WITH DIVERSITY, SUSTAINABILITY AND ESG? DIVERSITY

In 2021, the FSC developed the FSC Women in Investment Management Charter (WIM Charter). The WIM Charter was developed to provide members with practical tools and guidance to support greater gender balance within investment management teams. The FSC WIM Charter introduces accountability and transparency mechanisms to enable organisations to achieve their desired, selfnominated, gender diversity target within their investment management teams.

Sustainability

TheFSChasadvocatedfortheneedforamandatoryclimate risk disclosure regime to enhance funds management members ability to manage climate risk in their portfolio and efficiently allocate capital when accounting for climaterelated risks and opportunities. The Australian government is currently undertaking a consultation process to implement a climate reporting regime for corporate Australia.

In 2022, the FSC released a guidance note on climate risk disclosure in investment management, which provides guidance to members on claiming net zero in portfolios, disclosing climate-related features in investment products and climate risk reporting.

The FSC believes that consistent sustainability disclosure obligations across corporate Australia will provide investors will confidence that Australian companies are properly considering the risk that climate change poses to their business and operations.

Esg

GiventheneedforgreaterindustrycertaintyinESGpractices, the FSC is developing industry guidance on product labelling andgreenwashing,whichwillbenefitconsumersinpromoting greater understanding and more efficient capital flows.

Greaterconsumerunderstandingandinvestorconfidencewill mean Australia is better placed to attract climate risk aware capital, take advantage of the technological and energy transition, and meet its emissions reduction commitments.