ASIC’s 31-Day Notice Relief Extended: What Sophisticated Investors Should Know

In a move that underscores the regulator’s continued efforts to support both depositor flexibility and systemic stability, the Australian Securities & Investments Commission (ASIC) has formally extended its long-standing relief on 31-day notice term deposits via Instrument 2025/172, effective from March 28, 2025.

This legislative remaking ensures that term deposits with a 31-day notice period retain their classification as “basic deposit products”—a key designation that directly impacts how they’re marketed, managed, and disclosed to investors. For sophisticated and wholesale investors, particularly those managing Self-Managed Superannuation Funds (SMSFs), this is not just a regulatory footnote—it’s a material change to how short-duration liquidity can be planned within fixed income strategies.

What Is the 31-Day Notice Period—and Why Does It Matter?

Traditionally, term deposits offer locked-in capital protection and guaranteed interest payments, with fixed terms ranging from 1 month to 5 years. However, since the 2015–2018 global reforms following the Basel III banking framework, APRA-regulated institutions in Australia have required at least 31 days' notice for early withdrawal on certain term deposit products, especially for wholesale balances.

Under the ASIC relief, these 31-day notice deposits remain regulated like ordinary term deposits, avoiding stricter treatment under the Corporations Act that would otherwise apply to complex financial products.

“This continuation by ASIC ensures investors still enjoy the yield certainty and simplicity of term deposits, without being burdened by reclassification hurdles,” said Gary Kingshott, Managing Director of Pro Capital Rates. “It’s a smart balancing act—between regulatory oversight and real-world portfolio needs.”

Key Takeaways for Fixed Income Investors

The remaking of Instrument 2025/172 means banks and financial advisers can continue offering 31-day notice term deposits with the same treatment as traditional ones—provided the conditions remain within ASIC’s guidelines. For fixed income investors, this presents multiple benefits:

• Greater liquidity planning: Especially valuable for retirees or SMSFs needing access to funds with relatively short notice.
• Preserved compliance pathways: Advisors and investors avoid the complexity of re-documentation or additional disclosures.
• Yield potential remains steady: Banks continue to price 31-day notice deposits competitively, especially above the 3–6 month thresholds.

According to Pro Capital Rates analysts, average gross yields on 3- to 6-month notice deposits with 31-day withdrawal conditions currently range between 4.35% and 4.65% p.a., depending on institution and capital tranche. These products are increasingly being used in bond laddering and short-term reserve pools within diversified portfolios.

Use Case: SMSFs and Laddered Liquidity

One of the most common investor classes affected by this policy are Self-Managed Super Funds (SMSFs)—many of which are required to maintain some degree of liquidity to meet pension obligations, tax events, or portfolio rebalancing.

By allocating part of their cash or defensive exposure to 31-day notice term deposits, these funds achieve incrementally better yields than call accounts, while preserving near-term flexibility.

“We see many sophisticated SMSFs deploying rolling allocations into 31-, 60-, and 90-day deposit tranches,” said Kingshott. “ASIC’s move ensures those investors won’t face unnecessary classification issues for simply optimizing cash returns.”

Risk & Regulation Perspective

The renewed instrument also signals ASIC’s acknowledgment that interest-rate volatility and liquidity preference are reshaping investor behaviour.

Although these products remain capital-protected under the Financial Claims Scheme (up to $250,000 per ADI, per person), ASIC maintains that investor education and suitability frameworks are still essential.

Pro Capital Rates advises investors to:

• Check APRA authorisation of the deposit-taking institution.
• Understand the cooling-off and notice period mechanics.
• Use deposit ladders that match income needs and cash flow timing.
• Consult a qualified adviser for liquidity versus yield trade-offs.

What This Means Going Forward

The continuation of this exemption is especially notable given the broader macro environment:

• Cash rate remains at 4.10% with no imminent cut in sight.
• Term deposit competition has tightened, especially from neobank and wholesale ADI entrants.
• ASIC has moved to clarify grey areas in structured product disclosures, suggesting basic deposit reliefs may be more clearly codified in future legislation.

In short, the 31-day rule provides a much-needed middle ground for investors balancing yield, access, and compliance—particularly as global fixed income markets show renewed volatility.

Final Thoughts from Pro Capital Rates

“ASIC’s latest action reinforces the critical role of short-term fixed deposits in a balanced fixed income strategy,” concluded Kingshott. “For many Australian investors, especially those in pre-retirement or managing wealth independently, this change supports smarter and safer capital allocation.”

As always, Pro Capital Rates encourages investors to refer to updated term deposit yield comparisons and consult with qualified professionals for alignment with financial goals. Our monthly comparison guides include current rates across wholesale banks, neobanks, and regional lenders—providing a bird’s eye view of where short-duration returns are moving.