The Australian regulator has pinged another big-name fund manager over breaches of new product-marketing rules.
In an order issued last week, the Australian Securities and Investments Commission (ASIC) put a stop on retail sales of three funds (collectively holding some A$4.2 billion) offered by Advance Asset Management, the multi-manager unit of the Westpac Australia-owned BT Financial Group.
Under the interim ASIC order, Advance has been given 21 days to amend so-called ‘target market determinations’ – or TMDs – of the three products: the Balanced Multi-Blend Fund; the International Shares Multi-Blends Fund; and, the Property Securities Multi-Blend Fund.
Most Australian retail financial product providers are now required to craft TMDs that define target markets as per the Design and Distribution Obligations (DDO) rules introduced in 2021.
The imminent Financial Markets (Conduct of Institutions) Amendment Act (COFI) will introduce some DDO-like duties for those caught by the law with flow-on effects for third-party distributors.
However, the more prescriptive Australian DDO regulations apply to all retail fund managers (among other financial services firms), which must publish TMDs for each product.
The Advance funds are not distributed in NZ (although the Westpac KiwiSaver fund used it as an underlying manager for a time) but last November ASIC pulled up Perpetual for similar breaches on products offered on this side of the Tasman too.
According to the Australian regulator, the Advance TMDs “were very broadly drafted and failed to define key concepts”.
ASIC also noted that the Advance TMDs failed to properly define:
- the information that distributors must report to Advance so that Advance can determine whether a review trigger has occurred;
- the period for reporting this information to Advance; and
- the review triggers for the TMDs.
“To date, ASIC has issued 27 DDO interim stop orders,” the release says. “Of these, 19 interim stop orders have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn, and eight remain in place.”
Westpac Australia assumed control of the Advance multi-manager business in 2008 as part of its purchase of St George Bank.
Last year the bank struck a deal to sell Advance (managing about A$44 billion at the time) to Mercer Australia in a package deal that also included the free handover of the BT personal and corporate superannuation assets of almost A$38 billion.
While the Advance sale has yet to settle, Mercer Australia said its total assets under management would swell to about A$90 billion post including both the multi-manager and BT super funds.
In a similar arrangement earlier this month, Mercer NZ absorbed about $2.6 billion in funds previously managed by Macquarie NZ (formerly AMP Capital). The Macquarie NZ transfer was first brokered by Mercer Australia.
Earlier this month, Mercer Australia also attracted ASIC attention for ‘greenwashing’ charges in the first legal case of its kind in the country.