Two REs in ASIC’s sights
Two responsible entities (REs) remain under high intensity, broad-based surveillance by the Australian Securities and Investments Commission (ASIC) after falling well short of the regulator’s requirements with respect to the asset holding requirements of Regulatory Guide 133 (RG 133).
ASIC this week published the results of a review into compliance with asset holding requirements and funds management and custodial services and found that, overall, the industry was falling short of its requirements.
“While there were some examples of good practice, overall we found that compliance with RG 133 and the related instruments fell short of our expectations,” the ASIC review documentation said. “Generally, there was a poor level of understanding of the requirements in RG 133 among the responsible entities and smaller custodians that we reviewed.”
Dealing with the shortcomings identified in the review, ASIC said that in some instances there was poor awareness and understanding of RG 133 and related instruments, resulting in poor compliance.
“Some entities were not well resourced at the director and compliance staff level, and did not respond to our review inquiries comprehensively or in the allocated timeframe,” the review report said.
It went on to say that some responsible entities could not locate key documentation following the acquisition of a business, highlighting that a change in custodian or transfer of a responsible entity business “represents a significant operational challenge, as it diverts resources from day-to-day tasks”.
ASIC said that as a result of its review, it had required entities to rectify identified breaches and to amend or update their custody agreements and risk management arrangements, to improve compliance.
“Two entities remain the subject of high-intensity, broad-based surveillance at the time of this report, and we have required two entities to address specific concerned identified through the review,” it said.
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