ASIC increases focus on managed funds sector

risk management compliance disclosure funds management ASIC global financial crisis

22 March 2013
| By Staff |
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Responsible entities in the managed funds sector will need to ensure risk management systems can identify, assess and treat risks under proposals by the Australian Securities and Investment Commission (ASIC).

ASIC's consultation paper and proposed regulatory guidance regarding risk management practices for responsible entities in the managed fund sector (Consultation Paper 204) cements many current practices in the industry and align with international standards and development in risk management, ASIC said.

ASIC Commissioner Greg Tanzer said it was essential to standardise risk management practices.

"This sector has gone through a transformation in recent times, including consolidation, and the ability to identify and act upon risks before they emerge as an issue, is key for business and for promoting confident and informed investors," he said.

Responsible entities would also need to ensure processes were suitable for individual business objectives and operations and that they addressed all material risks including strategic, governance, operational, investment and liquidity risks.

ASIC proposed responsible entities review risk management systems on an annual basis with respect to appropriateness, effectiveness and relevance to individual businesses.

"One of the lessons for financial regulators since the global financial crisis is the need to become more proactive and respond to market trends," Tanzer said.

In what may have been a signal that ASIC will increase its focus on the sector, speaking at the Conference of Major Superannuation Funds 2013 on Wednesday, Tanzer said some of the current superannuation reforms to improve disclosure including providing a look-through of underlying investments was appropriate for managed funds as well.

Submissions close on 3 May 2013.

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