The Australian Securities and Investments Commission (ASIC) has commenced surveillance into the marketing of managed funds, to identify the use of misleading performance and risk representations in promotional material.
The corporate regulator had recently taken enforcement action against fund managers for misleading or false advertising, including the Mayfair 101 Group, La Trobe Financial Asset Management and the Skyring Fixed Income Fund.
ASIC deputy chair, Karen Chester, said: “ASIC has broadened our managed fund surveillance, as retail and unsophisticated investors continue to grapple with historically low yields alongside the outlook of even greater global risks and uncertainties”.
ASIC would scrutinise traditional and digital media marketing of funds, including search engine advertising, targeting retail investors and potentially unsophisticated wholesale investors, such as some retirees.
ASIC said it was concerned that, in the current highly volatile and low-yield environment, consumers seeking reliable or high returns were being misled about the performance and risks of the funds they were investing in.
This surveillance follows on from ASIC’s ‘True to Label’ initiative, which examined whether representations in fund labels might have misled consumers about the funds’ characteristics and underlying assets.
Chester said: “ASIC remains concerned that managed fund promoters continue to target consumers, particularly retirees or those planning for retirement, with ambiguous or misleading performance and risk representations.
“Where we identify fund marketing of concern, we will also review the corresponding product disclosure statements, websites and target market determinations to assess if the marketing claims are misleading.
“ASIC is committed to protecting consumers where misleading marketing practices run counter to their interests. If we identify misleading conduct, we will take prompt action to disrupt behaviours by deploying across our regulatory tools – from administrative intervention through to enforcement action if warranted.”
