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The action was taken to protect consumers from acquiring a financial product that may be unsuitable for their financial objectives, situation, or needs.
The order targets the registered managed investment scheme, operated by RELI Capital Limited, and follows a surveillance campaign by the corporate regulator into the private credit sector.
The intervention stems from concerns regarding the fund’s Target Market Determination (TMD), a mandatory document under the Design and Distribution Obligations (DDO).
ASIC listed several key issues:
- The target market potentially includes investors who intend to hold the Fund as a ‘Core Component’ (25–75 per cent) of their portfolio.
- The Fund’s risk level ‘Risk level 3 (Low to Medium)” is an incomplete measure of the Fund’s risk.
- The TMD states that the Fund is suitable for investors seeking capital preservation.
- The TMD specifies that no distribution conditions are necessary for the Fund.
The interim order prohibits RELI Capital from issuing a product disclosure statement for the fund to retail clients, dealing in interests of the fund, or providing general financial product advice that recommends investment in the fund to retail clients.
The order remains in force for 21 days, unless revoked earlier by ASIC. The order provides RELI Capital with an opportunity to address ASIC’s concerns and take necessary corrective action, such as amending its TMD.
This action is a result of ASIC’s ongoing surveillance of the retail private credit sector. This program focuses on critical areas, including fund transparency, governance, valuation practices, and the management of conflicts of interest to ensure the fair treatment of investors.
ASIC has issued 95 interim stop orders and one final stop order under the DDO regime since its inception.
The regulator has recommended that existing investors in the RELI Capital Mortgage Fund review their investment to assess whether it remains appropriate for their personal financial goals, situation, and risk tolerance.
As of 31 December 2024, the Fund held around $50.9 million in net assets.
