Australian Unity to pay $7m penalty for compliance faliures
Make us a preferred source
Make us a preferred source on Google
The news: Australian Unity Funds Management has been ordered by the Federal Court to pay a $7.125 million pecuniary penalty for breaching design and distribution obligations.
The context: Australian Unity admitted it failed to take reasonable steps to ensure interest in its Australian Unity Select Income Fund was distributed to investors that matched the criteria outlined in its target market determinations (TMD).
The failure led to hundreds of investors investing in the fund even though it may not have been suitable for them.
Australian Unity admitted:
- On 89 occasions it did not require, as part of their application, a completed questionnaire with answers to questions to determine whether investors were within the target market; and
- On 239 occasions did not review submitted questionnaires to determine whether they were within the target market.
Australian Unity told the court the employee who was tasked with compliance did not have appropriate experience or training.
The fund manager has also been ordered to pay the Australian Securities and Investments Commission’s (ASIC’s) legal costs.
What they said: In handing down his judgement, Justice Moshinsky said the "explanation is essentially that the person tasked with ensuring compliance with the DDO regime (the DDO Project Manager) did not have appropriate experience or training”.
“This reflects poorly on the ‘compliance culture’ of AUFM at the time. It suggests that AUFM did not take its regulatory obligations sufficiently seriously.”
ASIC deputy chair Sarah Court said: “The failure to assess product suitability for investors can expose them to products which are not appropriate for them and create the potential for financial loss”.
The source: ASIC
