If it was good enough for Benjamin Franklin, Australia's corporate regulator was happy to purloin the phrase.
‘Failing to plan is planning to fail’ was the headline in the media release that the Australian Securities & Investments Commission (ASIC) used to send a shot across the bow of Australia’s $2 trillion (US$1.3 trillion) fund management industry.
ASIC published the results of a review showing many responsible entities (REs) managing close to $1 trillion in investments were potentially putting retail investors at risk by failing to maintain adequate compliance plans.
ASIC said most of the 50 compliance plans used by REs operating 1,471 funds failed to adequately address the most important design and distribution obligation (DDO), internal dispute resolution (IDR) and reportable situations (RS) regime requirements.
ASIC Commissioner Alan Kirkland said compliance plans played a fundamental role in the regulatory framework designed to protect retail investors, by requiring REs to identify all compliance obligations and methodically set out adequate measures to address them.
He said many of the plans ASIC reviewed failed to adequately set out compliance with important regulatory obligations.
It was concerning that some plans failed to address DDO at all, suggesting that they had not been meaningfully reviewed since 2021.
“There is no excuse for the scale of poor practice we have identified,” Kirkland said in a media release.
ASIC called on REs to swiftly address inadequacies and gaps in their compliance plans, including by taking account of ASIC's key findings and considering examples of better practices employed by some REs.
ASIC has written to some REs about its concerns about their compliance plans and is investigating others for potential breaches of their legal obligations.
“We will continue to monitor the quality of compliance plans going forward. This review will not be limited to the obligations we examined in our recent surveillance,” Kirkland said.
The 50 participants in ASIC’s review operate 45% of all registered managed funds. They hold 47% of the approximately $2 trillion value of all registered managed fund sector assets.
