What a Responsible Entity Actually Does in a Registered Scheme

Under section 601FC, the RE must act in the best interests of scheme members. Where there is a conflict between the interests of members and the interests of the RE itself, the Act does not leave the balance to negotiation: members' interests must be given priority. This is a stronger formulation than the ordinary fiduciary obligation to avoid conflicts. It anticipates that conflicts will arise, because the RE is typically part of a corporate group that earns fees from the scheme, may distribute through related advisers, and may hold other mandates competing for the same capital or opportunities.

Consider an RE that operates two schemes chasing the same asset: the priority rule does not remove that tension, but it fixes the answer in advance, so the allocation decision must be tested against members' interests rather than the RE's own book.

Section 601FC sets out a specific list of duties that go well beyond good administration. The RE must act honestly, exercise a reasonable degree of care and diligence, treat members who hold interests of the same class equally, not make improper use of information obtained through the role, ensure scheme property is clearly identified and held separately from the RE's own property and from other schemes it operates, and comply with the scheme's constitution and its compliance plan. These are not internal policy commitments the RE has chosen to adopt. They are statutory obligations enforceable by ASIC and, in some circumstances, directly by members, and a breach can expose the RE and its officers to civil penalty consequences under the Act.

The RE, or a custodian it appoints under the scheme's constitution, holds legal title to the scheme's assets. Members hold the beneficial interest. That separation is not a technicality; it is the mechanism that protects members if the RE fails. Scheme property does not form part of the RE's assets for the purposes of its own insolvency, and it is not available to the RE's general creditors.

Where the constitution requires an independent custodian, that appointment adds a further layer between the entity that manages the scheme's investment decisions and the entity that physically holds the assets, so a receiver or administrator appointed over the RE cannot reach scheme property to satisfy the RE's own debts. That segregation has to be real and operating, not a clause sitting unused in the constitution, which is why custodial arrangements feature as a standing item in the compliance plan itself.

Every registered scheme must have a compliance plan, lodged with ASIC, setting out the measures the RE will apply to ensure it complies with the Corporations Act and the scheme's constitution. The plan is not a marketing document. It has to describe adequate and effective measures, and the RE must have those measures actually operating, not merely documented on paper.

The plan is subject to audit at least once a year by a person who meets the Act's independence requirements, and the audit report goes to the RE's board and, in the prescribed circumstances, to ASIC. A compliance committee may also be required where the RE's board does not have a majority of external directors, adding a further check between management and the members whose capital is at stake. Members are entitled to see whether that structure is genuine rather than nominal, and a well run RE treats the annual audit as a live test of its controls rather than a formality to be cleared.

The distinction matters most at the point where commercial interest and member interest diverge: related party transactions, fee arrangements, the allocation of investment opportunities across schemes managed by the same RE, and decisions about scheme wind-up or restructure. An administrator executes instructions. A fiduciary is judged on the substance of the decision, not just whether the paperwork was completed correctly.

The Act extends related party protections, analogous to those governing public companies, to registered schemes, requiring member approval or a specific statutory exception before the RE can provide a financial benefit to a related party out of scheme assets. Holding an AFSL authorising the operation of a registered scheme is itself conditional on the licensee meeting these fiduciary standards on an ongoing basis, and ASIC has the power to suspend or cancel that authorisation where it is not satisfied the RE is meeting them.

For a company director considering a managed investment structure, or an investor assessing a scheme before committing capital, the practical test is whether the RE can demonstrate its fiduciary conduct, not just its administrative competence. That means a compliance plan that describes real, operating controls rather than boilerplate, a clear custodial arrangement for scheme property, disclosed and constrained related party dealings, and a board structure that gives members' interests a genuine check against the RE's own.

It also means asking who sits on the compliance committee, how often the plan is actually tested, and what happens when a related party transaction is proposed. The responsible entity is often the least visible party in a scheme's structure. It is also the one carrying the legal duty to put members first when it matters most.