ASIC names 5 funds over marketing concerns

Mike Taylor

Managing Editor and Publisher

30 November 2022

The Australian Securities and Investments Commission has named five managed funds with which it has concerns over marketing.

The regulator said the concerns had emerged as a result of a surveillance.

It said that, together, these funds have approximately $705 million in assets under management as at October 2022.

The regulator said that the marketing concerns ASIC identified varied across the funds. ASIC was concerned that the representations made were not consistent with long-standing regulatory guidance that:

• projected fund performance must be reasonable and include prominent and proximate qualification or warnings;
• promotion of fund benefits requires prominent and proximate balancing risk disclosure;
• comparisons of funds with other products must be appropriate and reasonable; or
• recommendations should be attributed and testimonials should be appropriate and reasonable.

In examining the quality of the responsible entities’ oversight of the marketing by their investment managers, ASIC identified a need for more robust marketing approval processes to ensure only approved advertising is used.

“As at the date of this media release, neither ASIC nor a court have made any findings that any of these responsible entities, or any persons or entities associated with these funds (listed in the table above), are in breach of the law. The entities have not made any admissions of guilt or liability,” the ASIC announcement said.

“In response to ASIC’s concerns, all the responsible entities voluntarily amended their marketing materials and practices. They also agreed to amend their compliance plans to enhance their approval and ongoing supervision of fund marketing. “

While the compliance plan modifications varied across the funds, they generally included requirements that:

• all marketing material be approved by the responsible entity prior to release;
• all dynamic digital advertising be thoroughly tested by the responsible entity prior to release;
• marketing material be vetted by external counsel prior to release;
• marketing material be regularly checked to ensure that it is digitally displayed as approved; or
• regular training of personnel involved in fund marketing be conducted.

‘We expect responsible entities to meaningfully supervise their funds management business,’ ASIC Deputy Chair Karen Chester said. ‘As managed fund gatekeepers, they need to monitor, supervise and ultimately approve the fund’s marketing to investors to ensure that it is accurate and reliable.’