ASIC places stop orders on property trusts

Yasmine Raso

Senior Journalist, Financial Newswire

21 November 2022

Two trusts from MPG Funds Management Limited, MPG Bulky Goods Retail Trust and MPG Essential Services Property Trust, have had interim stop orders placed on them by the Australian Securities and Investments Commission (ASIC).

The orders stop MPG from offering or distributing the two trusts to investors due to deficient target market determinations (TMDs) as part of the design and distribution obligations (DDO) requirements for financial products to better address the needs of consumers.

Valid for 21 days, the interim orders prevent the firm from “issuing interests in, giving a product disclosure statement for, or providing general advice to retail clients recommending investments in the trusts”.

In a statement released today, ASIC said it placed the orders on the trusts to ensure investors did not potentially invest in funds that may not be suited to their financial goals or needs. The TMDs were also not at the appropriate level of specificity required under the DDO to ensure the trusts would reach consumers in the target market.

“ASIC is concerned that MPG has not appropriately considered these features and risks in determining the target markets for the Trusts because the TMDs include investors:

• with a tolerance for an undefined ‘medium risk’;
• wanting stable and regular income distributions; and
• needing liquidity or needing to make withdrawals during the investment term for the Trusts.

“Lastly, ASIC considered that the TMDs did not adequately specify:

• the information that distributors must report for MPG to promptly identify the occurrence of a review trigger (or any event/ circumstance) that would suggest that the TMDs were no longer appropriate;
• the period for reporting this information to MPG; and
• the review triggers for the TMDs.”

The corporate regulator said it expects the firm to “take immediate steps to ensure compliance” with the DDO requirements, from which it will consider making a final order if such concerns are not addressed.

This is the latest in a string of 15 interim stop orders issued by ASIC for failure to meet DDO requirements.