The corporate regulator has issued interim stop orders across three BT funds worth $4.2bn

BT Financial’s Advance Asset Management prevented from offering three funds to retail investors because of non-compliant target market determinations.

Advance Asset Management manages about $27.8bn in all.

Advance Asset Management has been blocked from offering or distributing three funds managing a cumulative $4.2bn to retail investors because of non-compliant target market determinations.

The Australian Securities and Investments Commission on Friday issued interim stop orders preventing the BT Financial Group’s Advance, which manages $27.8bn in total, from offering or promoting the products to clients.

The stop order will remain in place for 21 days unless revoked earlier, with ASIC saying it expects Advance to consider its concerns and take immediate steps to ensure compliance.

The funds in question were the Advance Balanced Multi-Blend Fund with $1.7bn in assets under management (AUM), the Advance International Shares Multi-Blend Fund with $1.4bn in AUM and the Advance Property Securities Multi-Blend Fund with $1.1bn in AUM.

“ASIC made the interim stop orders to protect retail investors from potentially investing in funds that may not be suitable for their financial objectives, situation or needs,’’ the regulator said in a statement.

“ASIC considered that the target market determinations (TMD) were very broadly drafted and failed to define key concepts.

“For example, Advance described investors in the target market for the Advance Balanced Multi-Blend Fund as having the tolerance to invest at the ‘medium to higher’ end and investors in the target markets for the Advance International Shares Multi-Blend Fund and Advance Property Securities Multi-Blend Fund as having the tolerance to invest at the ‘higher end of the risk spectrum’ but did not define what these concepts meant.

“It is therefore not possible to accurately determine which retail investors fall within the target market for each fund.’’

The orders stop Advance from issuing interests in the funds, handing out a product disclosure statement or providing general advice to clients relating to investing in the funds.

“ASIC will consider making final orders if the concerns are not addressed in a timely manner,’’ the regulator said.

“Advance will have an opportunity to make submissions to ASIC before any final stop orders are made.’’

Under the financial sector’s design and distribution obligations, a TMD must be produced which sets out the class of consumers a financial product is likely to be appropriate for, known as the “target market’’.

A BT spokesperson said the organisation “takes its regulatory obligations seriously and has taken immediate steps to comply with these orders’’.

“These products have been withdrawn from the market while we work with ASIC to understand and address its concerns.

“While these interim orders are in place existing holdings remain invested and managed by Advance Asset Management.’’