Funds Update - 20 June 2025

In this Funds Update for 20 June 2025.

1. Civil penalty proceedings commenced re DDO reasonable steps
2. Updated ASIC guidance relating to funds and AFSLs

Civil penalty proceedings commenced re DDO reasonable steps 

On 11 June 2025, ASIC commenced civil penalty proceedings against the responsible entity of a contributory mortgage scheme for failing to take reasonable steps under the design and distribution obligations (DDO) in relation to the use of a DDO questionnaire for the scheme.

ASIC alleges that the responsible entity failed to take reasonable steps because:

• it had given some, but not all prospective investors an online or paper questionnaire to determine whether a potential ‘non-advised’ investor was within the scheme’s defined target market. During an initial period, the questionnaire was only provided to online applicants and during a later period, paper applicants were also asked to complete the questionnaire;
• where questionnaires were submitted by applicants, they were not reviewed by the responsibility entity during the period from October 2021 to August 2023; and
• the responsible entity had issued interests in the scheme during that period, including to 87 investors who had not completed a questionnaire.   

ASIC’s full originating process can be found here.

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Updated ASIC guidance relating to funds and AFSLs 

On 16 June 2025, ASIC reissued and updated a number of regulatory guides and information sheets which relate to funds and AFSLs.

Notably, ASIC has reissued and combined RG 1 Applying for and varying an AFS licence with the RG 2 AFS Licensing Kit: Part 2 – Preparing your AFS licence or variation application and RG 3 AFS Licensing Kit: Part 3 – Preparing your additional proofs.  Each of RG 2 and RG 3 have now been withdrawn.

ASIC has also made corresponding updates to other regulatory guides and information sheets, including:

• RG 105 AFS licensing: Organisational competence 
• RG 121 Doing financial services business in Australia 
• RG 131 Funds management: Establishing and registering a fund 
• RG 148 Platforms that are managed investment schemes and nominee and custody services 
• RG 166 AFS licensing: Financial requirements 
• RG 176 Foreign financial services providers 
• INFO 251 AFS licensing requirement for trustees of unregistered managed investment schemes 

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