Below are notes taken from a meeting at which time ASIC provided information on its activities in assessing participants in the financial services industry.
These notes may be of interest to property and mortgage fund managers, platform operators and other holders of Australian financial services licences.
1. During the 2013/14 financial year, ASIC targeted 10 entities due to suspected breaches of the Corporations Act or ASIC policy.
• 6 of the entities were found to be in compliance.
• 1 entity agreed to modify its AFS licence by having the authorisation restricted to the schemes already in operation.
• 2 entities had their licence cancelled and are in the process of being wound up.
• 1 entity is currently adjusting its processes and policies.
2. RG 45 & RG 46 Benchmark Disclosures – mortgage and property fund managers
ASIC targeted 10 unlisted mortgage fund managers. There was a combination of both pooled and contributory mortgage fund managers. ASIC found that 9 out of 10 had disclosed in line with benchmark disclosure requirements, although 3 of them disclosed in line with the old benchmarks requiring them to make some minor amendments. Only one fund manager breached the financial reporting disclosure requirements.
10 unlisted property trust managers were targeted and all failed to comply with Disclosure Principle 8. 5 of them failed to address one or more benchmark disclosure requirements. All benchmarks are required to be addressed, as a result there will be changes made to ensure compliance in the future.
3. Use of scheme assets/ related party disclosure
10 licensees were reviewed with the following results:
• 2 failed to properly identify scheme assets and to deal with related party disclosures.
• Misleading disclosure in PDS was identified.
• 3 entities had significant deficiencies in compliance arrangements such as insufficient records of complaints and breaches, lack of documented compliance processes, lack of minutes from compliance meetings and lack of compliance monitoring and reporting.
• 3 entities failed to comply with NTA requirements.
4. 14 platform operators were targeted with regard to compliance with RG 148
• There were some problems with IDRS and some concerns with conflict management.
• Also a few companies weren’t public companies, contrary to the legal requirements.
• Some concern re “orphaned” clients – those no longer aligned with financial planners, but are still on the platform and have no advisers to guide them.
5. Fees and fee gaming (better transparency of fees) are likely to be a focus in the future in relation to the superannuation area and managed investment schemes.
There is potential for development of an industry standard.
6. 3 compliance audit reviews were also conducted.
7. In addition to the above, ASIC carried the following work:
• 242 schemes were registered during the last financial year
• 530 applications for relief were considered
• 159 referrals from the reporting and misconduct were handled
• 149 surveillance matters conducted
• 62 PDSs were formally reviewed
• 38 entities were monitored due to a variety of issues
Disclaimer
The information in these notes is of a general nature and should not be considered to be the provision of legal advice. No assurance is given as to the accuracy or completeness of this information. If you have any queries or require assistance with your compliance matters, you can contact us by email: admin@knowcompliance.com.au or call us on (03) 9689 1186.