A recent shift in ASIC’s approach to various matters in the regulatory space has put asset managers, private lenders and advisory businesses on notice. Some notable regulatory landscape updates:

ASIC Interim Stop Order – LaTrobe

The recent ASIC interim stop order re-iterated ASIC’s power to cease new applications for an institution with the scale and size of LaTrobe Financial. With the issue at hand being one of mere documentation as opposed to the grade of the respective funds, it is worth noting that every aspect from due diligence upon inception of a Fund up to it’s success and maturity can warrant such a stop-order. It is assumed that the likes of LaTrobe engaged with industry experts and professionals in the development of a TMD and still breached their Design and Distribution Obligations (DDO). Such a stop-order should prompt all AFSL’s that issue financial products to potentially review all live documentation independently such as their PDS’s and TMD’s to ensure compliance with the Treasury Laws Amendment (Design and Distribution Obligations and Product Intervention Powers) Act 2019 and Regulatory Guide 274 (Product design and distribution obligations). A review of IM’s would further be beneficial in light of the recent developments and in particular private credit regulatory developments. The key issue surrounding the TMD was around the total percentage of an investors portfolio that was considered appropriate to place into their Funds. This was effectively reduced from 50% to 25% and ASIC have since lifted the stop order on two of LaTrobe’s funds. Another stop order was issued against RELI Capital Mortgage Fund for similar reasons with the addition of distribution conditions, capital preservation definition and fund risk level rating.

Private Credit 

A major shift in the regulation of private credit providers in Australia may well be in the works. ASIC has released its report on a range of issues identified in the private credit space and potential for heightened regulation. It is assumed knowledge that private credit funds have operated historically in a laissez-faire manner placing commercial interests at the forefront of their operation. This is somewhat understandable given the overall level of returns that are usually applicable and the unregulated nature of private credit. ASIC has signaled the potential for agreeing on industry standards in due course. ASIC has scrutinised various marketing practices and terminology used in private credit offer documentation. Now is a perfect time for private credit providers to dissect their overall fund structure, operation and true returns information against their released offer documentation such as Information Memorandums, fact sheets etc. ASIC have unequivocally stated that more scrutiny of private credit providers is on the way. 

Crypto Exchanges 

Regulatory oversight has now determined that crypto-exchanges will be required to apply for an AFSL under new legislation to be introduced by the federal government. Currently, crypto-exchanges are only required to have AML and KYC policies in place. This is the perfect time for proposed and existing crypto exchanges to consider their overall compliance obligations and formally apply for an AFSL at the appropriate time. 

Shield Master Fund 

Super-switching has been a major focus on ASIC’s radar over the last couple of years. So much so that ASIC has created a dedicated page listing AFSL’s that have had their licence cancelled or enforcement actions against them. ASIC has provided their guidance on lodging complaints with providers confirmed to have systemic issues and a large scale of clients affected (see resources below). Macquarie has agree and committed to repay $321M to affected clients in the Shield Master Fund. ASIC has shed light on the fact that Macquarie as superannuation trustee oversaw the investments into the Shield Master Fund. Macquarie expects to recover approximately 70 cents in the dollar from the Shield liquidiation. Equity Trustees is also being sued in the Federal court for its role as a super platform host for the collapsed fund. It is worth noting that as superannuation trustee/platform operator, there is a heightened expectation of the regulator that individual funds offered under the platform are appropriately managed and scrutinised. High-level super switching are typically a sign of potential inappropriate advice especially when they are into related party funds and a limited number of platforms. ASIC’s info sheet 182 covers the broad requirements for super switching.  

Advisory businesses should ensure that tight compliance oversight is in place for super switching advice with a well-defined policy and process. An example of a problematic SOA provided by MWL (another affected provider) “We considered recommending you stay with BT Super….. However, this was discounted as the cumulative returns during X period to X period for this alternative was 58.53 per cent, which is lower than the recommended funds.” Where advisory businesses have large scale advice into related party products, a clearly defined licensee standard and compliance process is required to ensure that the foundation of their business is sound and sufficient scrutiny of the APL is provided with sound reasoning and considerations.  

Hallmark Compliance Manager Banning 

ASIC has banned an individual from MWL Financial Services from providing any financial services, as an officer, responsible manager, compliance manager, any function involved in the carrying on of a financial services business and controlling an entity that carries on a financial services business. This appears to be the first of a kind banning from a compliance manager function. Does this pave the way for similar bannings as a result of heightened ASIC supervision? It appears that the function of a compliance manager is becoming defined by ASIC. It is well known in the industry that Resposible Managers may hold such a function for various AFSL’s. It is also well known that various Repsonsible Managers are ‘RM for hire” which typically means that these responsible managers have little understanding of the AFSL operations. This poses an existential risk for an AFSL. Similarly, this is the perfect time frame for AFSL holders to ensure responsible managers, compliance managers and all parties involved in an AFSL are in sync and aware of all business operations. AFSL holders should not be ominous of reporting breaches if identified internally. 

Oct 2025