An accurate IM may not be enough: ASIC action highlights website disclosure risk

by Alanah McAliece

ASIC has issued infringement notices to the trustees of three superannuation funds in relation to allegedly inaccurate information about investment options published on websites and member portals.

In one case, the correct information was contained in the formal Investment Guide forming part of the PDS, but information published on the trustee’s website was inconsistent. While the recent action concerned superannuation trustees, it highlights a broader issue for fund operators: ensuring that websites, factsheets and other investor-facing materials remain accurate and consistent with the fund’s formal disclosure documents.

Investor-facing materials should be consistent

Fund operators commonly provide information to investors through a range of materials, including:

  • information memoranda;
  • websites and factsheets;
  • investor presentations;
  • newsletters and investor updates; and
  • performance and marketing material.

Where these materials are prepared or updated separately, there is a risk that changes made to one document are not reflected elsewhere.

ASIC’s recent action indicates that having the correct information in a formal disclosure document may not be sufficient where inconsistent information is separately provided to investors.

Relevance for wholesale funds

Wholesale managed funds are generally not subject to the same PDS requirements as retail managed investment products.

However, trustees and managers of wholesale funds remain subject to the prohibitions on misleading or deceptive conduct in relation to financial products and financial services.

Section 1041H of the Corporations Act 2001 (Cth) prohibits misleading or deceptive conduct, or conduct likely to mislead or deceive, in relation to a financial product or financial service.

ASIC has also previously scrutinised managed fund advertising and website disclosure, including representations about investment performance and risk. In 2022, ASIC stated that its surveillance extended to marketing directed at retail investors and potentially unsophisticated wholesale investors.

An accurate information memorandum therefore does not necessarily address an inaccurate or misleading statement made elsewhere.

Areas of potential inconsistency

Inconsistencies may arise where changes to a fund are reflected in its formal documents but not in its website or other investor materials.

This may include changes to:

  • investment strategy or portfolio composition;
  • target returns;
  • liquidity or withdrawal arrangements;
  • fees and distributions;
  • valuation methodology; or
  • material risks affecting the fund.

For example, an information memorandum may be updated following a change to the fund’s investment strategy or liquidity arrangements while the corresponding website or factsheet remains unchanged.

What should fund operators do?

Trustees and fund managers should consider including websites, factsheets and other investor-facing materials in their ongoing disclosure review processes.

In particular, fund operators should consider whether:

  • website and marketing content remains consistent with the current information memorandum and constitution;
  • statements about investment strategy, returns, liquidity and risk remain accurate;
  • material changes to the fund are reflected across relevant investor communications; and
  • there is a process for updating affected materials when disclosure changes.

ASIC’s recent action is a useful reminder that disclosure documents should not be reviewed in isolation. Fund operators should ensure that the information provided to investors remains accurate and consistent across all channels.

For more information, contact Chris Mee at cmee@cnmlegal.com.au or Alanah McAliece at amcaliece@cnmlegal.com.au.

This paper is produced as general information in summary for clients and should not be relied upon as a substitute for detailed legal advice or as a basis for formulating business or other decisions. CNM Legal asserts copyright over the contents of this document.