AUSTRALIA Law and Practice Contributed by: Michael Lawson, Nicole Brown, Lizzie White and Tamaryn Leach, MinterEllison
a PDS for a fund or providing general advice to retail clients about an investment in a fund. The product issuers are expected to address ASIC’s concerns promptly; otherwise, ASIC will con - sider making a final order. Report 795 ASIC published Report 795, “ Design and dis- tribution obligations: Compliance with the rea- sonable steps obligation ”, in September 2024, which sets out some of ASIC’s key observa - tions arising from its recent DDO surveillance and enforcement activities. The observations primarily relate to an issuer’s obligation to take reasonable steps that will (or are likely to) result in distribution being consistent with the TMD and include the following: • issuers should check that a distributor has the capacity to distribute a product in accord - ance with the TMD before selecting them; • issuers should ensure that staff involved in the distribution of a product receive sufficient training to ensure distribution is consistent with the TMD; • issuers should ensure that their overall mar- keting strategy and the content and market - ing channel for any marketing and promotion - al materials are aligned with the TMD; • where a distributor decides that it is appropri - ate to use a questionnaire as part of comply - ing with their reasonable steps obligation, they should ensure it is effective for the prod - uct, considering all relevant factors; and • issuers should use existing information or data about a consumer or class of consum - ers (where available) when taking reasonable steps to direct the distribution of a product to the target market. .
The report also shares some observations in relation to reliance on poor-quality question - naires by issuers of investment products. Greenwashing – ASIC INFO sheet 271 ASIC is seeking to support effective climate and sustainability governance and disclosure, and its regulatory focus is responding to the growth in sustainability-related investments. This growth has been stimulated by the global trend of capi - tal markets aligning with sustainability goals, but ASIC is concerned that poor governance and disclosure will result in an increased risk of greenwashing. In June 2022, ASIC issued Information Sheet 271, titled “ How to Avoid Greenwashing When Offering or Promoting Sustainability-Related Products ” (“INFO 271”). In 2023, ASIC began enforcing the principles outlined in this docu - ment. Additionally, ASIC has included this topic as a continued area of focus in its current corpo - rate plan. The principles in INFO 271 are under - pinned by misleading and deceptive conduct law derived from the Corporations Act and the ASIC Act. INFO 271 defines greenwashing as the practice of misrepresenting the extent to which a financial product or investment strategy is envi - ronmentally friendly, sustainable or ethical. INFO 271 provides nine principles (“Principles”) that ASIC considers should be taken into account when preparing communications regarding sus - tainability-related products, as follows. • Is the product true to the label? – Sustainabil - ity-related labels must reflect the substance of the product and the underlying investment strategy, stewardship approach and asset holdings. • Has vague terminology been used? – ASIC cautions against broad, sustainability-related
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