ASIC releases findings from review of responsible entity governance

31 January 2022

ASIC has released findings from a high-level review of the governance practices of 10 large responsible entities of managed investment schemes. ASIC undertook the review to explore specific aspects of responsible entity governance and gain some early insights.

The managed funds industry plays a significant role in delivering financial outcomes for Australians. As at 30 June 2021, Australians invested approximately $1.5 trillion in 3,616 registered managed investment schemes, with many having exposure to the managed funds industry directly through investments or indirectly through their superannuation.

Good governance practices support sound decision-making by the boards of responsible entities by ensuring they are well-informed and less susceptible to conflicts of interest. This, in turn, can optimise the capacity of responsible entities to deliver better outcomes for investors while complying with the law.

The responsible entities in ASIC’s review were not selected based on risk or specific concerns. ASIC chose the responsible entities based on the total value of assets under management (indicative of schemes with significant retail investment) and specific business models used. As at 30 June 2021, these responsible entities collectively managed approximately $588 billion in registered schemes.

ASIC collected information from the responsible entities regarding a range of topics, including business models, board composition, performance and governance as well as compliance committees and service provider oversight. ASIC also met with the responsible entities to discuss and obtain further information.

The findings from ASIC’s analysis are detailed in a presentation, which also summarises the relevant legal frameworks and sets out important considerations regarding governance for the responsible entities and their boards.

ASIC has provided the findings to the 10 responsible entities and written to them individually.

ASIC encourages all responsible entities to consider the review findings and proactively take steps to evaluate and improve their governance practices to stay ahead of both financial and non-financial risks, improve compliance and deliver better investor outcomes.

For more information, download the presentation Governance of responsible entities