ASIC releases enforcement and regulatory update for July to September 2022
ASIC’s quarterly enforcement and regulatory report for July to September 2022 demonstrates the regulator’s focus on its strategic priorities under its Corporate Plan for 2022-2026.
ASIC has released its quarterly enforcement and regulatory update for the period July 2022 to September 2022 (Report 753). Report 753 comes off the back of the release of ASIC’s Corporate Plan for 2022-2026 in August, which outlines the regulator’s strategic priorities for the next four years. In accordance with its new Corporate Plan, Report 753 offers an insight into how ASIC will work towards the following priorities over the next four years:
- Product design and distribution: reducing the risk of harm to consumers of financial and credit products caused by poor product design, distribution and marketing, including by driving compliance with new regulatory requirements.
- Sustainable finance: supporting market integrity through proactive supervision and enforcement of governance, transparency and disclosure standards.
- Retirement decision-making: protecting consumers as they plan and make decisions for retirement, with a focus on superannuation products, managed investments and financial advice.
- Technology risks: focusing on the impacts of technology in financial markets and services, driving good cyber-risk and operational resilience practices, and acting to address digitally enabled misconduct and scams.
While ASIC’s latest Corporate Plan was released in August 2022, Report 753 reflected the regulator’s enforcement and regulatory achievements against these priorities for the period July to September 2022. These achievements included:
- Protecting consumers and monitoring remediation by addressing consumer harms throughout the financial services sector, and expanding guidance on consumer remediation.
- Acting against misconduct by financial institutions, particularly in the design, distribution and marketing of financial products.
- Protecting investors and strengthening market integrity including acting against financial services licensees engaging in unconscionable selling practices, banning directors engaged in misconduct and extending product intervention orders for the issue and distribution of binary options for retail clients.
- Improving surveillance outcomes and implementing law reform including through the release of guidance on the Financial Services and Credit Panel and financial adviser exam, and calls for improvements in marketing materials published by fund managers.
ASIC has continued to be an active litigator against misconduct in the financial services sector. Notable penalties imposed by the courts during the quarter included:
These two penalties underscore that ASIC will not hesitate to use the threat of civil penalty proceedings as a means of deterring misconduct from financial services institutions.
ASIC has continued to take robust regulatory action to prevent and penalise misconduct in the financial services sector. The regulator has continued its focus on reducing the risk of harm to consumers and investors including from the poor design of financial products, and distribution and marketing practices of financial institutions, under its new design and distribution obligations (DDO). ASIC has issued 21 interim stop orders under the new design and distribution obligations (DDO) regime (with five issued this quarter), and have since launched civil penalty proceedings against American Express Australia in the first court case alleging breaches of the DDO regime. Further, ASIC Chair Joe Longo has said that it will “move quickly” when firms fail to meet their obligations under the DDO regime.
Report 753 demonstrates ASIC remain committed to protecting the integrity of the financial system and consumers from harm, and that the regulator will utilise its enforcement toolkit to do so. Moving forward, we expect Report 753 demonstrates the breadth of its full regulatory toolkit to achieve these aims.
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