The Federal Court has ordered Australian Unity Funds Management to pay a $7.1 million pecuniary penalty following significant breaches of design and distribution obligations.
The ruling comes after the fund manager admitted it failed to ensure that interests in its Select Income Fund were distributed only to investors who met specific criteria outlined in its target market determinations.
The court found that these systematic failures resulted in hundreds of individuals being placed into financial products that were potentially unsuitable for their investment needs, creating a heightened risk of financial loss.
The compliance breakdown was stark: Australian Unity confessed to 89 instances where it failed to require a completed suitability questionnaire from applicants and 239 instances where it neglected to review submitted questionnaires to verify if investors fit the target market.