AIOFP questions ASIC on sad MIS/PDS past

Mike Taylor

Managing Editor and Publisher

9 July 2025

The Australian Securities and Investments Commission (ASIC) has made clear that key issues around the Compensation Scheme of Last Resort (CSLR) and the vertical integration are matters for the Government of the day, not the regulator.

Answering questions directed to it by the Association of Independently Owned Financial Professionals (AIOFP), ASIC’s formal response has made clear both its approach and the limits of influence on Government policy.

However, the AIOFP has sought further responses from ASIC based on feedback from its members around the operation of Managed Investments Schemes (MIS) and Product Disclosure Statements (PDSs) noting that the current regime has been “an unmitigated disaster”.

The e-mail to ASIC originated by AIOFP executive director, Peter Johnston said “it is time ASIC acknowledged that if Advisers do not act in the best interests of their clients their business will fail”.

“They want the best outcome for their clients but many Advisers have been caught with Product failure over the decades caused by the incompetence of other stakeholders i.e. Trustees, Manufacturers, Custodians, Auditors, Research Houses, Regulators,” it said.

“The failure of Products is the greatest source of Consumer losses over this period,” the e-mail said pointing to the AIOFP’s research detailing post 2006 losses>

“…we expect the post 1991 losses will exceed $60 billion in aggregate, but very little has been done about it, it has been too easy for ASIC to attack the ‘low hanging fruit’ Advisers and not hold all other stakeholders to account,” it said.

The e-mail then asked: “surely the ongoing failure of the MIS/PDS process demands immediate attention to prevent products failing?” before suggesting that it might be tie to align both consumer and Australian Public Service interests by imposing a Best Interests duty on the conduct of public servants.

It also asked whether ASIC is going to change its approach to consumer protection and product failures arguing that consumers do not understand that AQSIC do not assess new product disclosure statement products before market release.

“They naturally think ASIC has approved the product,” it said.

“When a Product fails ASIC immediately attacks the Advisers involved while the other parties who manufacture, manage, administer the product escape accountability,” the e-mail said.

“We are pleased that ASIC are now investigating the role of Administrators, Trustees, Custodians, Auditors and Research Houses play in the failure of Product, but talk is ‘cheap’ what actions are ASIC proposing to put in place?”

The e-mail said that advisers are aware of the difficult role ASIC play but believed that advisers need to “have a more proactive role with policy and regulatory input to benefit consumers and the profession in general.

“We believe the existing intense ‘them and us’ attitude commenced in the post 1991/2 period when the flawed MIS regime created the need for a ‘scape goat’ to blame for Product Failure,” the e-mail said.

“…it is time to bury that lamentable period from the past. We are not holding the current ASIC management responsible for this malaise, it has been developing over the long term.”