Funds Update - 23 August 2024

In this Funds Update for 23 August 2024:

1. ASIC updates INFO 251 following court decision re authorised representative exemption
2. ASIC expands its strategic priorities for the next 12 months
3. ASIC publishes report on greenwashing regulatory interventions

 

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ASIC updates INFO 251 following court decision re authorised representative exemption

On 13 August 2024, ASIC updated Info Sheet 251 (AFS licensing requirement for trustees of unregistered managed investment schemes) to refer to the decision in ASIC v BPS Financial [2024] FCA 457.

ASIC’s update to Info Sheet 251 noted that the decision confirmed that the intermediary authorisation exemption could not apply where an authorised representative who makes the relevant offer and the product provider are the same person.

ASIC’s update also acknowledged the Court’s finding that an authorised representative could, in that capacity, be the issuer of a financial product under section 911A(2)(a) of the Corporations Act 2001 (Cth). ASIC noted that it had appealed this part of the decision, and would update Info Sheet 251 once there was an outcome in the appeal proceeding.

We have reported on the decision, and ASIC’s appeal, in previous Funds Updates on 17 May and 28 June respectively.

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ASIC expands its strategic priorities for the next 12 months

On 22 August 2024 ASIC announced an update to its Corporate Plan and strategic priorities, to note that Australia’s public and private markets and emerging financial products will form a new pillar of these priorities.

ASIC noted that:

• while Australia’s private markets are dwarfed in size by Australia’s listed equity markets, their opacity presents an outsized risk to market integrity, particularly as more investors become exposed to them; and
• the addition of a new strategic priority aimed at driving consistency and transparency across markets and products puts all market participants on notice.

The Corporate Plan is available here. ASIC’s strategic priorities include the following:

1. Improve consumer outcomes: ASIC will focus on driving better outcomes for consumers of financial products and services with a focus on the design and distribution of financial products, predatory sales and lending, financial hardship assistance and complaints / dispute resolution.
2. Address financial system climate change risk: supporting market integrity and protecting consumers and investors, with a focus on climate related disclosure, greenwashing, integrity and fairness in energy and carbon credit markets.
3. Better retirement outcomes and member services: supporting better outcomes for consumers planning for and in retirement.
4. Advance digital and data resilience and safety: managing and minimising technology, cyber and data-related risks.
5. Drive consistency and transparency across markets and products: strengthening integrity across markets with a focus on outcomes in public and private markets and existing and emerging financial products and services including new market participants.

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ASIC publishes report on greenwashing regulatory interventions

On 23 August 2024, ASIC published Report 791 titled ‘ASIC’s interventions on greenwashing misconduct: 2023-2024’ (the Report). The Report outlines ASIC’s 47 regulatory interventions to address greenwashing misconduct in the 15 months up to 30 June 2024.

ASIC’s regulatory interventions in this period included:

• obtaining an $11.3 million penalty against a superannuation trustee (see our previous Funds Update);
• issuing eight infringement notices totalling over $123,000; and
• succeeding in two civil penalty proceedings for greenwashing misconduct (see our Funds Updates from 28 March and 14 June).

One of the key recommendations made in the Report is that responsible entities (REs) should ensure that investments made by their managers or sub-managers are competently and independently verified as being consistent with the claims made about the fund’s sustainable investment strategy.

The Report also recommended that REs provide adequate explanations of investment exclusions or screening criteria, including in relation to any terms or thresholds used and whether screens are absolute or thresholds based.

The Report is available at this link.

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