ASIC recently announced that it had issued interim stop orders preventing Advance Asset Management Limited (Advance), part of the BT Financial Group, from offering or distributing three funds to retail investors because of non-compliant target market determinations (TMDs).
The orders stopped Advance from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investment in these funds. Advance was served the interim orders on 14 March 2023. The orders were valid for 21 days unless revoked earlier.
Prior to a hearing, Advance proposed amendments to the TMDs of the three funds that addressed ASIC’s concerns. Advance added information to all of the TMDs to more accurately describe the attributes of investors in the target market, including their intended use of the product and risk tolerance. Advance also included appropriate distribution conditions and reporting requirements for distributors in all of the revised TMDs.
As a result, on 30 March 2023, ASIC revoked all three interim stop orders and no final stop orders were made.
ASIC says it has issued 27 DDO interim stop orders. 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orders have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn, and eight remain in place.
UPDATE
On 29 June 2023 ASIC announced it had issued 38 interim stop orders that related to 67 pet insurance products issued by The Hollard Insurance Company Pty Ltd and PetSure (Australia) Pty Ltd (the insurers) across different levels of cover.
This was ASIC’s first use of its stop order powers in response to deficiencies in a TMD for an insurance product under the design and distribution obligations (DDO).
Following the interim stop order, the insurers made amendments to their TMD documents that addressed ASIC’s concerns. The new TMDs include information about the financial situation of consumers in the target market. Consumers will be in the target market only if they have the ability to pay premiums for the product, upfront cost of vet expenses and any other veterinary expenses above the accepted claim amount. As a result, on 29 June 2023, ASIC revoked the interim stop orders on the pet insurance products and no final stop orders were made.
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Author: David Jacobson
Principal, Bright Corporate Law
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About David Jacobson
The information contained in this article is not legal advice. It is not to be relied upon as a full statement of the law. You should seek professional advice for your specific needs and circumstances before acting or relying on any of the content.
