The Australian Securities and Investments Commission (ASIC) has issued interim stop orders on three BT funds for design and distribution obligation (DDO) failings.
The order prevented Advance Asset Management, BT specialist fund management business, from offering or distributing three funds to retail investors because of non-compliant target market determinations (TMDs).
The funds were:
• Advance Balanced Multi-Blend Fund with $1.7 billion in assets under management (AUM);
• Advance International Shares Multi-Blend Fund with $1.4 billion in AUM; and
• Advance Property Securities Multi-Blend Fund with $1.1 billion in AUM.
ASIC considered that the TMDs were very broadly drafted and failed to define key concepts.
“For example, Advance described investors in the target market for the Advance Balanced Multi-Blend Fund as having the tolerance to invest at the ‘medium to higher’ end and investors in the target markets for the Advance International Shares Multi-Blend Fund and Advance Property Securities Multi-Blend Fund as having the tolerance to invest at the ‘higher end of the risk spectrum’ but did not define what these concepts meant,” the regulator said.
Furthermore, the TMDs did not adequately specify:
• The information that distributors must report to Advance so that Advance can determine whether a review trigger has occurred;
• The period for reporting this information to Advance; and
• The review triggers for the TMDs.
The orders stopped Advance from issuing interests in, giving a product disclosure statement for or providing general advice to retail clients recommending investment in these funds. Advance was served the interim orders on 14 March, 2023. The orders were valid for 21 days unless revoked earlier.
To date, ASIC had issued 27 DDO interim stop orders. Of these, 19 interim stop orders have been lifted following actions taken by the entities to address ASIC’s concerns or where the products were withdrawn, and eight remain in place.
