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In this Funds Update for 6 February 2026:
- Federal Court delivers penalty judgment in DDO contravention case
- HSF Kramer releases 2026 Global FSR Outlook
- Announcement of new ASIC Chair
Federal Court delivers penalty judgment in DDO contravention case
On 30 January 2026, Moshinsky J of the Federal Court of Australia published the reasons for judgment in the most recent design and distribution obligations (DDO) case brought by ASIC against a responsible entity (RE).
Between 5 October 2021 and 5 October 2023, the RE had issued interests in a fund to unadvised retail clients:
- on 89 occasions, without requiring them to respond to the questionnaire that had been designed to determine whether potential investors were within the target market of the fund; and
- on 239 occasions, without reviewing the clients' responses to the questionnaire.
The Court made orders, which were agreed between the parties, for a declaration that the RE had contravened the reasonable steps obligation in section 994E(3) of the Corporations Act 2001 (Cth) and imposed a pecuniary penalty of $7,125,000. In assessing the amount of this penalty, the Court noted that the total maximum penalty was approximately $3.6 billion and that the penalty awarded in relation to the ASIC v Firstmac Ltd DDO case was $8 million and that the agreed penalty in ASIC v American Express Australia Limited was $8 million.
The RE was also ordered publish a written adverse publicity notice setting out its contravening conduct and under the RE's remediation plan, the RE will pay for personal advice (to be provided by a third-party adviser) for those investors whose questionnaire responses indicated they were outside the target market and for those investors who did not receive a questionnaire.
The Court had required the RE to provide supplemental evidence to explain how the contraventions had happened. This additional affidavit evidence referred to a lack of appropriate systems and procedures to ensure compliance with DDO obligations and identified factors which contributed to the contraventions including inadequate training and deficiencies in the RE's product governance arrangements.
You can read the Court's judgment here.
HSF Kramer releases 2026 Global FSR Outlook
HSF Kramer has released its Global FSR Outlook for 2026, which explores the macro regulatory themes which will be impacting on the financial markets globally during the upcoming year.
This year, authors from across our global FSR practice have focused on the role of individuals working in financial services. While technology and automation continue to be transformative, our analysis shows that individual decision-makers remain central to the future of financial services.
The articles in this year's Global FSR Outlook explore the theme of The Human Element through the following chapters:
- About AI in financial services
- Decision-making in modern financial services – leveraging the tech, while staying within the lines
- Diffused accountability – is recalibration overdue?
- Cultures reshaped by automation – where is the human in the loop?
- Top 5 – What's in store for financial services in 2026?
You can read our Global FSR Outlook here.
Announcement of new ASIC Chair
The Federal Government has announced the appointment of Sarah Court as the next Chair of ASIC. The current Chair Joe Longo will conclude his term on 31 May 2026.
Ms Court has been Deputy Chair since 2021 and has led ASIC's enforcement and investigation work. She will commence as ASIC Chair on 1 June 2026 for a term of five years.
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