ASIC identifies concerns with marketing of five managed funds
The Australian Securities and Investments Commission (ASIC) identified concerns with the marketing of five funds and the oversight of this marketing by four responsible entities during its ongoing surveillance into the marketing of fund performance and risk.
The responsible entities and their funds are:
Together, these funds have approximately $705 million in assets under management as at October 2022.
The marketing concerns ASIC identified varied across the funds. The regulator was concerned that the representations made were not consistent with long-standing regulatory guidance that:
- projected fund performance must be reasonable and include prominent and proximate qualification or warnings;
- promotion of fund benefits requires prominent and proximate balancing risk disclosure;
- comparisons of funds with other products must be appropriate and reasonable; or
- recommendations should be attributed and testimonials should be appropriate and reasonable.
In examining the quality of the responsible entities’ oversight of the marketing by their investment managers, ASIC identified a need for more robust marketing approval processes to ensure only approved advertising is used.
In response to ASIC’s concerns, all the responsible entities voluntarily amended their marketing materials and practices. They also agreed to amend their compliance plans to enhance their approval and ongoing supervision of fund marketing.
While the compliance plan modifications varied across the funds, they generally included requirements that:
- all marketing material be approved by the responsible entity prior to release;
- all dynamic digital advertising be thoroughly tested by the responsible entity prior to release;
- marketing material be vetted by external counsel prior to release;
- marketing material be regularly checked to ensure that it is digitally displayed as approved; or
- regular training of personnel involved in fund marketing be conducted.
ASIC commenced its surveillance of managed fund marketing in October 2021. So far, this surveillance has resulted in the responsible entities or trustees of 18 managed funds voluntarily amending their marketing materials and/or practices.