Australia: ASIC focus on financial services providers sharpens following market surveillance

ASIC has wasted no time in actioning its Corporate Plan with poor compliance by responsible entities and superannuation trustees firmly in ASIC's sights. Recent surveillance by ASIC has uncovered breaches of law and deficiencies in compliance measures by some responsible entities and superannuation trustees.

As we have previously reported, ASIC will be investigating investment banks, issuers, brokers, lenders, finance brokers, responsible entities, directors, auditors and insolvency practitioners over the next four years as part of its ongoing consumer protection mandate.

Responsible entities and trustees of superannuation funds should carefully review their existing policies and procedures with today's public release by ASIC of systemic compliance issues identified during its surveillance activities.

RESPONSIBLE ENTITIES

For responsible entities, ASIC found:

• defective or misleading disclosure and advertising material;
• poor internal control over the review and authorisation of disclosure and advertising material;
• deficiencies in compliance and governance frameworks, including poor internal control and ongoing monitoring processes; and
• inconsistencies between funds' governing documents and internal policies.

SUPERANNUATION TRUSTEES

ASIC noted that superannuation trustees are not complying with all aspects of the Government's "Stronger Super" reforms, especially in disclosing executive officer remuneration and in complaints handling. However, the primary sources of non-compliance centre around defective or misleading disclosure and advertising material, in particular:

• how rollover forms are being presented to new members;
• the promotion of "self managed" investment options; and
• advertising material not containing balanced messages about product risks and benefits.

With ASIC's intense scrutiny of AFS licensees, it is critical that compliance systems, policies and procedures are properly documented and designed in a way to ensure ongoing compliance with the law.

If you have concerns about your compliance with any of the areas ASIC has identified above, please contact a member of our team.

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