Australia’s investment watchdog is still having problems with the transition to Responsible Entities (RE) under the Managed Investments Act.
The Australian Securities and Investment Commission (ASIC) says nearly half of the registered REs have problems with the compliance structures, says Pauline Vamos, national compliance adviser with the regulator.
Surprisingly, 10 per cent of applicants did not include a compliance plan, so ASIC sent them back, Vamos says.
Another problem was that compliance officers have dual functions in the RE. This accounted for 32 per cent of the 376 applications for becoming an RE. ASIC has also found 12 per cent of compliance officers lacked the required levels of education and experience to hold the post.
One area ASIC is concerned about is outsourcing, says Vamos. It found 72 per cent of REs outsourced key functions.
“We are concerned about the expertise of the outsourcing supplier and the implications if the company is an overseas operation,” she says.
“This is also important if the distribution of a product is outsourced, so the RE must do its due diligence before appointing someone.”
Disclaimers are being missed off Web sites, Vamos says, and that is another problem REs must fix.
Areas that ASIC will be focusing on in the future will be compliance committees and the adequacy of audits of compliance plans.
“Make sure compliance plans are reviewed and audits are not just looking at the old scheme,” she says.
