ASIC has turned its attention to Australia's unlisted property schemes with the release of a new disclosure principle and six new disclosure benchmarks for the sector.
As part of the increase in focus on the sector, the corporate regulator has revised Regulatory Guide 46 "Unlisted property schemes: improving disclosure for retail investors" following concern there was "insufficient consistency or comparability" in the form of disclosure applied by responsible entities.
As a result, ASIC said it believed important information was not being adequately disclosed to end investors.
The regulator consulted with the industry and had updated the existing disclosure principles and introduced disclosure benchmarks based on industry feedback, ASIC said.
"ASIC's first priority is to ensure consumers and financial investors are fully informed and can make confident decisions," ASIC commissioner Greg Tanzer said.
"This is especially important when investing in financial products such as unlisted property schemes as they have particular risks such as gearing, valuations, liquidity, distributions and the diversification of the schemes' portfolio."
Tanzer said unlisted property schemes had become popular investment options for certain investors, however, as well as offering opportunities, the schemes also carried risks.
"It's necessary to ensure investors have the information they need to make informed investment decisions as inadequate disclosure can contribute to investors not understanding the risks," he said.
Under the new disclosure requirements, unlisted property schemes must disclose whether they meet the benchmarks.
"This means they must explain how they will deal with the business factor or the issue underlying the benchmark," ASIC said in a statement.
RG 46 also outlines the standards ASIC expects responsible entities to meet when advertising unlisted property schemes to retail investors as to clear, concise and effective disclosure of benchmark and disclosure principle information.
Responsible entities of existing unlisted property schemes should disclose the benchmark and updated disclosure principle information to investors by 1 November.
