ASIC finds compliance issues among responsible entities

The corporate regulator’s surveillance of responsible entities has uncovered a number of compliance areas in which they ‘fell short’ of their legal obligations.

ASIC said responsible entities were struggling to meet their obligations in managing conflicts of interest, breach reporting, rewards and incentives, whistleblowing, custody and risk management systems.

“While responsible entities demonstrated a broad commitment to complying with their obligations under the law, there were a number of areas where the they fell short,” said ASIC commissioner John Price.

“As the gatekeeper of significant investor funds, responsible entities are expected to act lawfully and in the interests of the investors they represent.”

Mr Price said the surveillance “showed there is still some work to be done” to meet higher standards and increasing consumer expectations.

The regulator made a series of recommendations to assist responsible entities bring their compliance processes in line with ASIC’s ‘what good looks like’ model.

The list of recommendations included that responsible entities ensure professional indemnity coverage was adequate for their needs, strengthening their conflict management measures, alignment of rewards and incentives with the responsible entities responsibilities and reviewing custody measures.

“We will be undertaking further surveillances of some responsible entities whose conduct fell short of required standards and remind the sector more broadly that ASIC will act when we identify compliance failures,” Mr Price said.

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