ASIC has made an interim stop order against the RELI Capital Mortgage Fund (Fund), a registered managed investment scheme operated by RELI Capital Limited (RELI Capital) to protect consumers and retail investors from acquiring a product that may not be suitable for their financial objectives, situation or needs.

ASIC’s action follows concerns that the target market in the Target Market Determination (TMD) for the Fund:

• 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 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, and 
• the TMD specifies that no distribution conditions are necessary for the Fund.

The interim order prevents RELI Capital from dealing in interests giving a product disclosure statement for, or providing general financial product advice to, retail clients recommending an investment in the Fund. The order is valid for 21 days unless revoked earlier.

This stop order referral arose from ASIC’s retail private credit surveillance which focused on fund transparency, governance, valuation practices, management of conflicts of interest and fair treatment of investors, conducted as part of its response to Australia’s evolving capital markets.

ASIC recommends investors in the fund review whether the fund remains suitable for their financial objectives, situation or needs.

Source ASIC