ASIC calls for comment on SRI guidelines
THEAustralian Securities and Investments Commission(ASIC) has called for submissions from stakeholders on whether it should issue guidelines on the new socially responsible investing (SRI) disclosure requirements for investment products.
ASIC issued a discussion paper last December in response to provisions introduced as part of the Financial Services Reform Act (FSRA) that require investment products to disclose in their product disclosure statements (PDS) the extent to which labour standards or environmental, social or ethical issues were considered in the selection, retention or realisation of the investment.
During the development of the paper, ASIC conducted an informal consultation process with over 20 industry stakeholders, including companies with and without SRI funds, community sector organisations such as environmental groups, and government departments.
ASIC deputy executive director of consumer protection Delia Rickard says the majority view was that some additional guidance from ASIC would be useful.
While the legislation makes disclosure of SRI considerations compulsory, ASIC is concerned primarily with the regulation of these disclosures, rather than the nature of investment managers’ SRI choices.
“While it is up to product issuers to determine what they have regard to, and how they make their assessments, they must ensure that consumers are aware of their approach,” Rickard says.
However, the diversity of investment products creates difficulties in establishing definitive guidelines.
“Because every product is different, the challenge is to give guidance that is meaningful to industry, that is not too burdensome, and that gives consumers sufficient information,” Rickard says.
The necessity of ASIC issuing guidelines has also been questioned during the consultation process, with alternatives offered such as industry associations developing their own guidelines.
TheInvestment and Financial Services Association(IFSA) has already developed its own set of guidelines, soon to be released, but says at this stage it agrees with ASIC’s approach to the issue.
IFSA deputy chief executive officer Jo-Anne Bloch says: “We’re comfortable with the discussion paper. The issues they’re talking about are what we’re talking about.”
IFSA’s guidelines, developed in collaboration with its members, seek to identify appropriate disclosure requirements for different types of investments and levels of exposure.
Recommended for you
The month of April enjoyed four back-to-back weeks of growth in financial adviser numbers, with this past week seeing a net rise of five.
ASIC has permanently banned a former Perth adviser after he made “materially misleading” statements to induce investors.
The Financial Services and Credit Panel has made a written order to a relevant provider after it gave advice regarding non-concessional contributions.
With the election taking place on Saturday (3 May), Adviser Ratings examines how the two major parties could shape the advice industry in the future.
