Industry Fund Services breaches ASIC class order

The industry fund sector financial planning licensee, Industry Fund Services, has been found to have invested member money in unregistered schemes in breach of an ASIC class order.

The corporate regulator has been working with IFS to resolve an identified breach of a regulatory class order. 

Responsible entities operating under the class order are restricted from investing in unregistered managed investment schemes on behalf of members, according to ASIC.

IFS recently changed its investment options after a review of their industry fund portfolio service found they were in breach of the class order.

"IFS had been investing in unregistered schemes on behalf of members since May 2012. IFS identified the breach in November 2013 and raised it with ASIC. ASIC has since been working with IFS to resolve this matter in the interests of investors," said an ASIC statement.

ASIC Commissioner Greg Tanzer stressed the importance of licensees identifying where a "technical breach of the law can result in the potential loss of key protection measures for investors".

However, the regulator added that "IFS acted promptly and in a way that protected members’ interests throughout the process".

IFS moved client funds to compliant investments in February 2014, according to the statement.

"ASIC considers the aspect of the class order breached by IFS is a key protection for investors. Investors should not lose any protection because they acquire interests in a managed investment scheme indirectly through a platform," said ASIC.

IFS has informed affected members about the change to their investment, and no loss for members has been identified, said the statement, adding that "ASIC acknowledges the cooperative approach taken by IFS in this matter".

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