Take note: ASIC reviewing fund compliance plans
Fund managers and responsible entities (REs) take note: ASIC is actively reviewing the adequacy of registered funds’ compliance plans across the sector. ASIC has identified widespread deficiencies and is now writing to those REs impacted and telling them to update their plans. ASIC’s review, which involved a detailed examination of compliance plans held in its own system, revealed that many REs are not meeting key regulatory obligations – particularly in relation to breach reporting, product design and distribution obligations, and internal dispute resolution processes.
Shortcomings
Key shortcomings highlighted by ASIC include inadequate identification and documentation of compliance obligations, insufficient monitoring and record-keeping, outdated plans, and a lack of clarity regarding responsible officers. In some cases, compliance plans failed to address critical obligations altogether or relied inappropriately on generic or third-party master compliance plans, leaving some funds without a substantive compliance framework.
ASIC contacting REs
Importantly, ASIC is now directly contacting REs where it considers compliance plans to be inadequate. The regulator has signalled that robust, up-to-date, and tailored compliance plans are essential for investor protection and sector integrity, and is considering a range of regulatory responses, including further investigation of potential breaches.
Key questions for REs
When developing, reviewing and modifying fund compliance plans, ASIC says REs should consider the following questions:
- Does your plan identify all the obligations in operating the fund or funds?
- Does your plan identify the functions and the officers responsible for performing and for monitoring each control?
- Does your plan specify how the performance of each control measure will be monitored?
- Does your plan identify an adequate frequency for performing each control and for the monitoring of that performance?
- Does your plan provide for the flow of useful information about control performance to the board or a compliance committee?
- Does your plan require adequate record keeping?
- Does your plan contain sufficient detail?
- Is your plan up to date?
What do you need to do now?
Given ASIC’s active engagement and the risk of regulatory action, it is crucial that REs urgently review and, where necessary, update their compliance plans to ensure they are comprehensive and fully implemented.
We strongly encourage you to contact the HW Funds team to discuss how your compliance plan can be reviewed and enhanced in line with ASIC’s expectations. Our experienced team can assist you in identifying gaps, updating documentation, and ensuring your compliance framework meets all regulatory requirements.
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