In our earlier Alert, we provided an overview of ASIC’s latest surveillance program into the marketing of managed funds. ASIC had said this program will focus on the use of performance and risk representations in promotional material. Their previous project had focused on whether marketing was ‘true to label’ in terms of product description and redemption features.
We have started to see ASIC taking its first steps under this new programme. We have been working with clients who have received notices concerning advertised rates (notably the use of ‘up to’ figures for returns), the prominence and content of disclaimers, as well as design features, such as the size and style of text. In keeping with ASIC’s expectation that fund managers must be responsive and quick acting, the timeframe for response to these notices is usually fairly short.
As ASIC has indicated its new programme will also take in funds dealing with ‘potentially unsophisticated wholesale investors’, such as retirees, we expect a greater diversity and number of funds will come under scrutiny.
Deficiencies in advertising can lead to claims from investors, regulatory action, AFCA complaints, and the imposition of licence restrictions. We expect ASIC will, in due course, release information concerning the action taken under this programme. We have seen increasing media interest in ASIC’s investigations, resulting in the release and publication of communications between ASIC and fund managers pursuant to the Freedom of Information laws.
If you have received any form of communication from ASIC, it is important you act promptly, including seeking advice and considering pausing the advertisements in question. Our Funds Management team can assist with a proactive audit of your advertising material, or help you respond to any notices or correspondence received from ASIC.