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ASIC will not publish firm level reportable situations data
In welcome news, ASIC has announced that it no longer intends to proceed with publication of firm level data on reportable situations. Following submissions received in response to CP 383 (Reportable situations and internal dispute resolution data publication), ASIC has outlined that it will proceed with firm-level publications of Internal Dispute Resolutions (IDR), while opting for only aggregate-level publication of reportable situations data.
ASIC is set to publish the reportable situations dashboard this month, with the IDR dashboard to be published later this year.
Instrument remade re pricing of MIS interests
ASIC has remade, with minor changes, its relief instrument related to the pricing of interests in managed investment schemes (MISs) (other than time-share schemes) registered before 1 October 2013.
ASIC Corporations (Managed investment product consideration) Instrument 2025/629 (ASIC Instrument 2025/629) builds on the relief previously provided under ASIC Instrument 2015/847. The minor changes introduced by ASIC Instrument 2025/629:
- simplify the requirements to document exercises of discretion affecting the pricing of interests and reduce the level of prescription in these provisions; and
- extend the relief to MISs whose interests are quoted on Cboe.
RE subject to greenwashing civil penalty proceedings
In its fourth greenwashing civil penalty proceedings, ASIC alleges that a responsible entity (RE) has engaged in conduct that is liable to mislead and failed to comply with its duties as a RE in relation to its environmental, social and governance (ESG) fund.
This is the first time that breaches of RE duties have been alleged in a greenwashing case, in this case that the RE failed to act with care and diligence by failing to:
- review the underlying investments of the ESG fund to ensure their consistency with the PDS;
- ensure its compliance documents identified any ESG related risks and related controls;
- comply with its own risk management framework, including its procedure for reviewing PDSs; and
- engage or employ an ESG expert to review or monitor the ESG fund.
ASIC also alleges that the RE failed to comply with its own compliance plan by not recording or lodging investor complaints and by failing to address investor concerns that the fund held investments contrary to representations made in the PDS.
Finally, ASIC alleges that the RE engaged in conduct that was liable to mislead on the basis that the PDS misrepresented the investment processes for the fund and the extent to which the RE would monitor the portfolio exposure and investment styles of underlying funds.
ASIC review of risks in offshore outsourcing
ASIC has published its findings from its separate reviews into the use of offshore services providers (OSPs) by REs and Australian financial services advice licensees (Advisers).
ASIC has stated that where functions are outsourced, REs and Advisers must:
- have measures in place to ensure that due skill and care is taken in choosing suitable OSPs,
- monitor the ongoing performance of OSPs, and
- appropriately deal with any actions by OSPs that breach service level agreements or the licensee's general obligations.
ASIC undertook a review of the use of OSPs by 10 REs and found that while most of those REs maintained appropriate systems, improvements could be made in the following areas:
- implementing comprehensive initial and ongoing due diligence processes for choosing and monitoring OSPs;
- ensuring clearly defined metrics in Service Level Agreements (SLAs);
- monitoring the ongoing performance of OSPs;
- maintaining the necessary resources and skills for monitoring outsourced activities;
- implementing mechanisms for dealing with breaches of SLAs by OSPs; and
- enhancing cyber security and resilience.
ASIC is encouraging all REs to consider these findings when engaging or managing OSPs.
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