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17 Sep 2020 ASIC updates

ASIC commences civil penalty proceedings against current and former directors of Linchpin and Endeavour

ASIC has commenced proceedings in the Federal Court of Australia against current and former directors of Linchpin Capital Group Ltd and Endeavour Securities (Australia) Ltd for allegedly breaching their duties as officers of a responsible entity of a registered managed investment scheme.

Read more here.

NAB superannuation trustee companies to pay $57.5 million penalty for fees for no service breaches

The Federal Court of Australia has ordered two entities in NAB’s wealth management division to pay a total $57.5 million penalty. The Court found that NULIS Nominees (Australia) Limited and MLC Nominees Pty Ltd made false and misleading representations to superannuation members about their entitlement to charge plan service fees and members’ obligations to pay the fees.

The Court also made declarations that MLC Nominees and NULIS failed to ensure that their financial services were provided efficiently, honestly and fairly. MLC Nominees will pay a total penalty of $49.5 million for its contraventions, while NULIS will pay a penalty of $8 million for its contraventions.

Read more here.

Court rulings support ASIC’s position on notice compliance and legal privilege

Two recent Federal Court decisions support ASIC’s position on obligations to comply with ASIC Act notices and to clearly substantiate any claims for legal professional privilege.

ASIC successfully obtained an order compelling Maxi EFX Global AU Pty Ltd to produce documents in response to an ASIC notice issued to it, pursuant to section 33 of the ASIC Act.

Separately, the Federal Court ruled in ASIC’s favour in a dispute over client legal privilege, finding that a privilege claim by RI Advice Group Pty Ltd (RI Advice), an IOOF subsidiary, could not be upheld.

Read more here.

AAT sets aside disqualification of SMSF auditor

On 5 August 2020, the Administrative Appeals Tribunal (AAT) set aside ASIC’s 2018 decision to disqualify Mr John Gilliland from being an approved SMSF auditor. This was due to breaches of auditor independence requirements.

On 1 September 2020, ASIC filed an application to appeal the AAT decision to the Federal Court of Australia.

Read more here.

ASIC updates the fees and costs disclosure regime

In light of industry feedback and the impacts of COVID-19, ASIC has made minor changes to the Regulatory Guide 97 Disclosing fees and costs in PDSs and Periodic Statements (RG 97) and the associated legislative instrument.

These changes were put in place in July 2020 and follow on from significant changes made in November 2019.

As part of these changes, PDS transition arrangements have been deferred to allow issuers more time and flexibility.

As part of 2019 changes, PDSs were required to be applied on or after 30 September 2020. Now, PDSs given on or after 30 September 2022 must comply with the new requirements.

However, an issuer may choose to apply the new requirements to a PDS dated on or after 30 September 2020.

In order to keep abreast of changes super trustees should:

  • Update existing system builds to ensure that the fund can meet the new requirements for fees and costs disclosure in PDSs and periodic statements by 30 September 2022.
  • Review calculation methodologies, due diligence processes and governance arrangements for collecting and compiling fees and costs information.
  • Consider arrangements with service providers, people offering investment opportunities and interposed vehicles and how the data is necessary for the fund's products.

Any further questions about the new requirements and amendments to RG 97 can be sent to feeandcostdisclosure@asic.gov.au.

Read more here

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