Australia Court Fines Australian Unity Funds Management $5 Million (AUD 7.125 Million) in Penalty for Failure to Confirm Suitability by Questionnaires for Retail Investors in Australian Unity Select Income Fund
1st February | Hong Kong
An Australia court has fined Australian Unity Funds Management $5 million (AUD 7.125 million) in penalty for failure to confirm suitability by questionnaires for retail investors in Australian Unity Select Income Fund. Australian Securities & Investments Commission (ASIC) 30/1/26): “The Federal Court has ordered Australian Unity Funds Management Limited (Australian Unity) to pay a $7.125 million pecuniary penalty for breaching design and distribution obligations (DDO) by failing to confirm the suitability of one of its products for retail investors. As responsible entity of the Australian Unity Select Income Fund (Fund), Australian Unity admitted that it failed to take reasonable steps to ensure that interests in the Fund were only distributed to investors who matched the criteria outlined in its three Target Market Determinations (TMDs) for the Fund. As a result, hundreds of retail investors were able to invest in the Fund even though the product may not have been suitable for them under those TMDs. Australian Unity, also known as AUFM, admitted that it issued interests in the Fund to retail clients: 1) on 89 occasions without requiring them to submit, as part of their application, a completed questionnaire with answers to questions to determine whether they were within the target market described in the Fund TMDs, and 2) on 239 occasions without reviewing submitted questionnaires that had been completed by them to determine whether they were within the target market described in the Fund TMDs … … In this case, of 328 non-advised investors who applied to acquire an interest in the Fund, 89 were not required to submit a questionnaire to assess their suitability. Of the other 239 who did submit responses, up to 144 of them provided at least one response that suggested they were not in the target market for the Fund. In addition to the pecuniary penalty, the Court has ordered that Australian Unity publish a written adverse publicity notice and send the notice directly to the last known email or postal address of impacted investors, being those who were either not required to submit a completed questionnaire as part of their application, or whose submitted questionnaires were not reviewed by Australian Unity and included at least one response which indicated that they were not in the target market for the Fund.” Background – Orders were made by the Federal Court of Australia in December 2025, and written reasons were published on 30 January 2026. Australian Unity is the responsible entity of the Fund and between 5 October 2021 and 5 October 2023, it made three TMDs identifying the class of suitable investors for the Fund. Australian Unity admitted that it contravened s 994E(3) of the Corporations Act 2001 (Cth). On 6 October 2023, Australian Unity updated the Fund TMD to include new distribution conditions which require Australian Unity to review responses to questionnaires prior to issuing interests in the Fund to prospective investors. Since October 2023, it has made the questionnaire compulsory for prospective investors and from July 2024, the questionnaires included ‘knock out questions’. The DDO regime requires financial product issuers and distributors to develop and maintain effective product governance arrangements across the life cycle of financial products. It requires product issuers to make a TMD by, among other things, identifying the class of retail clients that comprise the target market for their products. The maker of the TMD must take reasonable steps to ensure that the product is issued and distributed consistently with the TMD.”
“ Australia Court Fines Australian Unity Funds Management $5 Million (AUD 7.125 Million) in Penalty for Failure to Confirm Suitability by Questionnaires for Retail Investors in Australian Unity Select Income Fund “
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Australia Court Fines Australian Unity Funds Management $5 Million (AUD 7.125 Million) in Penalty for Failure to Confirm Suitability by Questionnaires for Retail Investors in Australian Unity Select Income Fund
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