Industry funds allege investment manager carve-out

Product manufacturers should not be excluded from the target market of the Australian Securities and Investment Commission’s product intervention powers, according to industry funds body, the Australian Institute of Superannuation Trustees (AIST).

In a submission filed with the Senate Economic Legislation Committee, the AIST said that investment managers could be regarded as product manufacturers and that the Royal Commission had “witnessed many examples where related parties such as investment managers have not acted in members’ best interest”.

“This, coupled with the European inclusion of product manufacturers in similar legislation, drives AIST to query why such a carve-out has been proposed,” the AIST said.

Related News:

“All components of the product manufacturing and distribution chain must both take responsibility for products and be held accountable for products,” it said. “This carve-out is part of an ongoing systemic set of carve-outs from the legislative framework.”

The AIST claimed that, in the end, it would be to consumers’ detriment.

The AIST said the bottom line of the legislation was that it did not cover all the key entities which created and distributed products, with investment management companies and product providers, which in turn provide information to platforms, exempted from ensuring that the products they developed and sold were suitable.

“International best practice has not been followed,” it said. “The European MiFID II requirements oblige product providers and parent entities to determine ‘target markets’. AIST once again queries why these entities have been carved out from the proposals.”

Related Content

FSC welcomes new laws to protect consumers

The Financial Services Council (FSC) has welcomed the passage of new legislation, the Design and Distribution Obligation (DDOs) and Product Interventi...Read more

Foster Stockbroking director banned

The Australian Securities and Investments Commission (ASIC) has banned director of Foster Stockbroking (FSB), Mark Joseph Hinsley, from providing fina...Read more

RC didn’t slow job growth in fin services

It seems the Banking Royal Commission did not slow down demand for jobs in the finance and insurance services sector, with the Sunsuper Australian Job...Read more




Can someone tell me why Fund Managers need to list on any Industry Fund menu other than them seeing a mountain of people to market their products to.
Wouldn't it be interesting if all Fund Managers withdrew their products from all Industry Fund menus and left only Cash and Term Deposit options available to industry fund members.
I wonder then, would industry funds moderate their attacks on them and the adviser channel.

This position also conventiently ignores investment outside of a superannuation trust.

Industry funds are the carve out king's.
Ask ASIC if one Industry Fund SOA has been reviewed.

Add new comment