ASIC issues DDO stop order against RELI Capital Mortgage
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The news: The Australian Securities and Investments Commission (ASIC) has made an interim stop order against the RELI Capital Mortgage Fund, a registered managed investment scheme operated by RELI Capital.
ASIC said the order was to "protect consumers and retail investors from acquiring a product that may not be suitable for their financial objectives, situation or needs".
The numbers: As of 31 December 2024, the fund held $50.9 million in net assets under management.
The context: ASIC’s action follows its surveillance on private credit and said it was concerned that the fund's determined target market potentially includes investors who intend to hold the fund as a ‘core component’ (25-75%) of their portfolio.
There are also concerns that the fund's declared risk level is an "incomplete measure of the fund's risk".
The interim order prevents Victoria-based RELI Capital from dealing in interests giving a product disclosure statement for, or providing general financial product advice to, retail clients recommending an investment in the fund. The order is valid for 21 days unless revoked earlier.
ASIC recommends investors in the fund review whether the fund remains suitable for their financial objectives, situation or needs.
Under design and distribution obligations (DDO), financial product issuers must define target markets for each of their products appropriately, with regard to the risks and features of the relevant product.
The source: ASIC media release
