Fund Regulatory Update
/ASIC consultation open on expiring class orders on changing responsible entities and equal treatment
The Australian Securities and Investments Commission (ASIC) is requesting feedback from responsible entities of managed investment schemes and corporate directors of corporate collective investment vehicles on a proposal to remake expiring class orders.
The class orders relate to changing the responsible entity of a listed scheme and equal treatment obligations of a responsible entity and corporate director, due to expire on 1 October 2023.
ASIC is satisfied with the activity of the class orders, and is asking for any feedback for remaking the orders. Submissions are due by 11 April 2023.
Stop orders on three BT funds
ASIC has issued interim stop orders on three BT Advance Asset Management Funds preventing the offering or distribution of the funds to retail investors due to non-compliant target market determinations (TMDs).
ASIC said the TMDs were very broadly drafted and didn’t define key concepts.
The affected funds are:
Advance Balanced Multi-Blend Fund
Advance International Shares Multi-Blend Fund
Advance Property Securities Multi-Blend Fund
Lendfin, Global Pacific Solutions and Gigi Investment Group licences suspended
Lendfin Private has had its financial services licence suspended by ASIC after the company failed to maintain required organisational competence and meet its financial reporting obligations. Lendfin has the opportunity to rectify the issues or appeal.
ASIC has suspended the Australian financial services licences of Global Pacific Solutions Group and Gigi Investment Group. Global Pacific Solutions’ licence has been suspended for three years, while Gigi’s has been suspended for three months.
Global Pacific failed to ensure the financial services it provided were done efficiently, honestly and fairly after the actions of Douglas Allen, the company’s sole director and secretary, came into question. Global Pacific has requested a review by the Administrative Appeals Tribunal, but withdrew it.
Gigi failed to lodge financial statements for the year ended 30 June 2021, did not pay the ASIC Industry Funding Levies, and didn’t maintain membership in the Australian Financial Complaints Authority (AFCA) scheme.
Gigi now has the opportunity to take the necessary steps to meet its obligations, and so far has lodged its outstanding financial statement and audit report, paid the levy, and obtained AFCA membership, and the suspension ended.
Treasurer hangs on to ASIC misconduct report citing ‘undue prejudice’
The Treasurer has refused to release a confidential report from the investigation into allegations of misconduct by an ASIC deputy chair Karen Chester saying there was ‘undue prejudice’.
Treasury was ordered by the Senate to provide the report by midday 9 March 2023, but that request was refused, claiming public interest immunity. The Treasurer said disclosure of the findings would ‘unreasonably infringe’ the privacy of the ASIC executives named.
The report contains allegations against Chester, with some information provided by informants, who cooperated under the expectation of anonymity. Some of the informants continue to work at ASIC and the fear was they would be subject to problems at work if their identities were known. Additionally, Chester would likely receive undue prejudice if the report were public.
The investigation did not find that all allegations were substantiated with insufficient basis for further interventions.
Capital Capital licence cancelled
ASIC has cancelled the Australian financial services licence of Capital Capital after the company failed to meet its financial reporting obligations.
Treasury reviewing MIS regulatory framework
Treasury is undertaking a review of the managed investment schemes (MIS) regulatory framework to see if it is fit for purpose, identify gaps and consider improvements to reduce undue risk for investors. The regulatory framework for MIS is over 20 years old, and several scheme failures have occurred, highlighting the need for a review.
A public consultation paper will be released in mid-2023, and after consultation with industry, findings will be reported in early 2024.
