No. ASIC does not treat past performance as a reliable indicator of future performance. REP 779 reinforces that performance is an important factor in product governance and monitoring, but it does not override the long-standing position that past performance alone is not a sufficient or predictive basis for investment decisions.
Expanded Answer
REP 779 focuses on how trustees and product issuers consider performance in product design, monitoring, and distribution, particularly for superannuation choice products. ASIC’s position is that performance should be actively assessed as part of product governance, including identifying underperformance and taking action where products are not delivering value. This reflects expectations under design and distribution obligations and broader governance frameworks.
However, this does not change ASIC’s long-standing guidance on disclosure and advice. Past performance remains inherently limited and must not be presented as a reliable indicator of future returns. From an advice perspective, recommendations must be based on the client’s objectives, financial situation, and needs, with performance considered alongside risk, costs, features, and suitability. From a licensee perspective, performance is a necessary input into APL and product monitoring decisions, but it is not determinative on its own.
Risk increases where performance is over-emphasised in advice, marketing, or product selection without appropriate context or supporting analysis. ASIC continues to scrutinise misleading representations and poor governance where underperformance is not addressed. For further context, see Why compliance isn’t enough: reconciling law with ethical principles and ASIC’s expectations and What does a defensible compliance framework look like for AFSL and credit licensees?.
Why it matters
Misinterpreting REP 779 can lead to over-reliance on past performance in advice or product governance, increasing the risk of poor client outcomes and regulatory action for misleading conduct or inadequate oversight.
Practical guidance
- Treat past performance as one input, not a predictor, in advice and product decisions
- Ensure disclosures and advice clearly explain the limits of past performance
- Incorporate performance into governance and monitoring alongside risk, cost, and suitability factors
Further reading