The Australian Securities & Investments Commission published findings from a review of compliance plans used by responsible entities of registered managed investment schemes, identifying widespread poor practice and inadequate treatment of key regulatory obligations. Responsible entities were reminded that compliance plans must be adequate, kept up to date, and implemented and monitored in practice, with deficiencies potentially indicating governance failings and increasing risk of harm to retail investors. ASIC reviewed compliance plans for 50 responsible entities, including “master compliance plans” where used across multiple funds, covering 1,471 funds in total. The selected entities represent 14.5% of responsible entities, operating 45% of registered funds and holding 47% of sector assets (approximately 2 trillion). The review tested how plans addressed three obligation sets introduced or enhanced in October 2021: reportable situations reporting, product design and distribution obligations, and internal dispute resolution processes and reporting. Most plans did not adequately address important requirements across these areas, some did not address one or more obligations at all, and treatment of design and distribution obligations was the weakest overall. ASIC also found cases where responsible entities wrongly relied on parts of a master compliance plan for a fund operated by a different responsible entity, leaving some funds without a substantive compliance plan. Although compliance plan audits were not in scope, ASIC raised concerns that none of the 23 auditors involved issued qualified audit reports on the areas of concern over the last three audit cycles or raised relevant concerns with ASIC, and it reiterated auditors’ notification obligations. ASIC is considering regulatory responses, including writing to responsible entities on expectations for reviewing and modifying plans, and is investigating potential breaches while continuing further compliance plan reviews across the sector.
Australian Securities & Investments Commission 2025-06-02
Australian Securities & Investments Commission review finds widespread deficiencies in managed fund compliance plans and flags potential breaches
ASIC's review of compliance plans by responsible entities of registered managed investment schemes revealed widespread poor practices and inadequate adherence to key obligations. Covering 50 entities managing 1,471 funds, it found deficiencies in reportable situations, product design and distribution, and dispute resolution. Some entities improperly relied on master compliance plans, and auditors failed to issue qualified reports. ASIC is considering regulatory actions and further investigations.