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Restrictions on Lawyers' Managed Investment Schemes Commence 1 July

Restrictions on Lawyers' Managed Investment Schemes Commence 1 July

By Legal Profession Uniform Law LPUL@liv.asn.au

Legal Services Legislation Practice Management Uniform Laws 

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Section 258 of the Legal Profession Uniform Law (LPUL) commences on 1 July 2018 in Victoria, along with a number of new rules under the Legal Profession Uniform General Rules 2015 (Uniform Rules). The new legislation will affect the involvement of law practices in the promotion and operation of mortgage practices and other managed investment schemes (MIS), as well as the provision of legal services in connection with these practices.

Changes to section 258

On 27 March 2018, the Justice Legislation Amendment (Access to Justice) Bill 2018 (Access to Justice Bill) was introduced into the Victorian Parliament. Among other things, the Bill introduces limitations to the scope of the MIS prohibitions as recommended in the final Legal Services Council (LSC) Report on its Inquiry into Section 258.

Specifically, the Access to Justice Bill introduces section 258(1A) which excludes internal firm arrangements (such as service trusts) from the prohibition).

In summary, the restrictions will now cover:

  • law practices and their related entities promoting or operating in an MIS;
  • law practices providing legal services in relation to an MIS in which an associate of the law practice has a substantial interest; and
  • law practices providing certain mortgage-related services to private lenders in circumstances where the law practice (or its agent or associate) has introduced the borrower to the lender.

LSC Draft Uniform Rules and Information Sheet on MIS

Together with the LPUL changes, the LSC is also developing new Uniform Rules. It is currently undertaking preliminary consultations with Designated Local Regulatory Authorities, including the LIV, on these Rules and an accompanying Information Sheet.

Consultation and feedback

Practitioners who would like to contribute to the LIV’s response to the LSC’s Draft Rules and Information Sheet should contact LPUL@liv.asn.au to request a copy of the documents.

Comments to feed into the LIV’s submission will be accepted until Friday, 11 May.

Practitioners who would prefer to make their own submissions will have an opportunity to do so from 21 May, when the LSC will release the Draft Rules and Information Sheet for public consultation.


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