ASIC finds managed investment scheme deficits
The licence of one responsible entity has been suspended and the Australian Securities and Investments Commission (ASIC) has identified key areas of non-compliance after undertaking a review of the unlisted property managed investment scheme (MIS) sector.
According to ASIC's findings, non-compliance by the responsible entities examined was generally associated with inadequate numbers of compliance staff or in circumstances where there had been significant restructuring at either the responsible entity or scheme level.
However, ASIC commissioner Greg Tanzer said the regulator had found that the majority of the responsible entities reviewed had been complying with their obligations and adhering to good industry practice.
He said ASIC had chosen to review responsible entities operating unlisted property schemes because the schemes represented a popular investment vehicle for retail investors and posed some risks, particularly because of their illiquidity.
"Current economic conditions meant this sector had been experiencing some stress," Tanzer said.
Among the areas of non-compliance identified by ASIC were a failure to meet base level financial requirements and to hold professional indemnity insurance, along with a failure to belong to an external dispute resolutions scheme.
The ASIC analysis also pointed to inappropriate compliance arrangements for the nature, scale and complexity of a responsible entity's business, poor risk management systems and insufficient measures to control and monitor the release of information to investors.
Tanzer signaled that ASIC would be conducting ongoing reviews across the MIS sector.
"We will take action where we identify significant or systemic non-compliance in order to improve industry standards and generate broader investor confidence in the sector," he said.
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