The Australian Securities and Investments Commission (ASIC) has issued an interim stop order against the RELI Capital Mortgage Fund, a registered managed investment scheme operated by RELI Capital.
In a statement, ASIC said the order was made “to protect consumers and retail investors from acquiring a product that may not be suitable for their financial objectives, situation, or needs.”
The stop order prevents RELI Capital from dealing in interests, giving a product disclosure statement, or providing general financial product advice to retail clients recommending an investment in the Fund. The interim order is valid for 21 days unless revoked earlier.
As of Dec. 31, 2024, the fund held $50.9 million in net assets under management. RELI Capital is not the responsible entity of any other registered managed investment scheme.
According to ASIC, its concerns centred on the fund’s target market determination (TMD). These included:
The target market potentially includes investors who intend to hold the fund as a “core component” (25-75%) of their portfolio
The fund’s risk rating “risk level 3 (low to medium)” was considered an incomplete measure of the fund’s risk
The TMD stated that the fund is suitable for investors seeking capital preservation
The TMD specified that no distribution conditions were necessary for the fund
ASIC said the stop order arose from its retail private credit surveillance program, which has been examining fund transparency, governance, valuation practices, conflicts of interest, and fair treatment of investors.
This surveillance is part of ASIC’s broader response to Australia’s evolving capital markets, with private credit emerging as a growing source of funding outside the traditional banking system.
Since the design and distribution obligations (DDO) regime commenced, ASIC has issued 95 interim stop orders and one final stop order, highlighting the regulator’s willingness to act quickly where products are misaligned with target markets.
ASIC recommended that existing investors in the RELI Capital Mortgage Fund review their position.
The regulator advised investors to “review whether the fund remains suitable for their financial objectives, situation or needs.”
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