BT’s Advance Asset Management hit with interim stop orders

Westpac-owned Advance Asset Management has been hit with design and distribution obligations interim stop orders by the Australian Securities and Investments Commission over three funds it is offering to retail investors.

ASIC announced the interim stop orders today stating they affected:

• Advance Balanced Multi-Blend Fund (ARSN 087 296 375), with$1.7 billion in assets under management (AUM);
• Advance International Shares Multi-Blend Fund (ARSN 087 295 501), with $1.4 billion in AUM; and
• Advance Property Securities Multi-Blend Fund (ARSN 094 112 580), with $1.1 billion in AUM.

ASIC noted that Advance Asset Management is the specialist asset management business within BT Financial Group.

The orders stop Advance from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investment in these funds. Advance was served the interim orders on 14 March 2023. The orders are valid for 21 days unless revoked earlier.

ASIC made the interim stop orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs. ASIC considered that the approach taken by Advance did not meet the appropriateness requirements under the design and distribution obligations (DDO).

ASIC considered that the TMDs were very broadly drafted and failed to define key concepts. For example, Advance described investors in the target market for the Advance Balanced Multi-Blend Fund as having the tolerance to invest at the ‘medium to higher’ end and investors in the target markets for the Advance International Shares Multi-Blend Fund and Advance Property Securities Multi-Blend Fund as having the tolerance to invest at the ‘higher end of the risk spectrum’ but did not define what these concepts meant. It is therefore not possible to accurately determine which retail investors fall within the target market for each fund.

ASIC also considered that the distribution conditions outlined in the TMDs were inadequate. Furthermore, the TMDs did not adequately specify:

• the information that distributors must report to Advance so that Advance can determine whether a review trigger has occurred;
• the period for reporting this information to Advance; and
• the review triggers for the TMDs.

ASIC expects Advance to consider the concerns raised about the TMDs and take immediate steps to ensure compliance. ASIC will consider making final orders if the concerns are not addressed in a timely manner. Advance will have an opportunity to make submissions to ASIC before any final stop orders are made.