The Australian Securities and Investments Commission (ASIC) has started court action against Australian Unity Funds Management Limited alleging it acted unlawfully by failing to take reasonable steps to ensure retail investors were in the target market for one of its investment products.

Australian Unity is the responsible entity of the Select Income Fund and between 5 October 2021 and 5 October 2023, it made three Target Market Determinations identifying the class of suitable investors for the Fund. ASIC alleges Australian Unity failed to take reasonable steps to ensure retail investors who invested in the Fund were in the target market.

During the relevant period, Australian Unity gave prospective investors a questionnaire to determine whether a potential ‘non-advised’ investor was within the Fund’s defined target market.

For the first half of the relevant period, the questionnaire was only provided to online applicants. From September 2022, paper applicants were also asked to complete it. However, ASIC alleges none of the questionnaire answers were reviewed until August 2023, and that Australian Unity did not use the answers to screen prospective investors until 6 October 2023, despite issuing interests in the Fund throughout this period.