ASIC has published Report 528: Responsible entities’ compliance with obligations: Findings from 2016 proactive surveillance program which contains the findings of compliance by 28 responsible entities with their legal obligations. These are entities that operate managed funds on behalf of retail investors.
In general, ASIC found that the responsible entities in the surveillance program demonstrated a commitment to complying with their obligations under the law. These responsible entities generally have established measures for compliance, risk and governance, and disclosure, supported by ongoing reviews to address their obligations.
However, its findings also indicated a number of areas where the responsible entities fell short of ASIC’s expectations and its view of “what good looks like” in the funds management sector.
The surveillances also identified responsible entities that require further, more targeted surveillance work.
ASIC has made recommendations to improve compliance including:
- ensuring professional indemnity coverage is adequate for the nature, size and complexity of the responsible entity’s business;
- reviewing and, where necessary, strengthening their conflicts management measures;
- reviewing custody measures to ensure they meet the requirements;
- accountability from top management about disputes;
- reviewing and strengthening existing cyber resilience measures;
- focusing on the board’s role in influencing the culture of the organisation;
- alignment of remuneration, rewards and incentives with the values of the responsible entity;
- having in place appropriate whistle-blowing measures; and
- measures that reflect a consumer-focussed culture.
