The Australian Federal Court has ordered Firstmac Limited to pay $8 million in penalties for failing to comply with its design and distribution obligations (DDO) under the Corporations Act, it was revealed Friday.
Firstmac Fined $8 Million for Breaching Design and Distribution Obligations
It marks the Australian Securities and Investments Commission’s (ASIC) first civil penalty action against a distributor for DDO breaches.
ASIC explained in a press release that the case centred on Firstmac’s marketing of its High Livez investment product, a registered managed investment scheme, to 780 existing term deposit holders between October 2021 and September 2022.
The court is said to have found that Firstmac failed to take reasonable steps to ensure that its distribution was consistent with the product’s target market determination (TMD).
ASIC added that Justice Downes, in her decision, highlighted that Firstmac’s conduct was “objectively reckless” and that the company “courted the risk” of distributing product disclosure statements (PDS) to individuals outside the product’s target market.
‘Firstmac’s conduct fell short of the standard required by the DDO and increased the risk of harm to consumers to whom the High Livez PDS was inappropriately distributed,’ Justice Downes said.
She concluded that Firstmac’s actions fell short of the required standard, increasing the risk of harm to consumers.
ASIC Chair Joe Longo stated, “This is an important decision that acknowledges the risk of consumer harm caused by poor product design, distribution, and marketing by Firstmac.
He added that “compliance with the DDO is essential to protect customers.”
Firstmac has also been ordered to cover ASIC’s legal costs in the case.
