ASIC has released an update of its enforcement priorities and regulatory timetable for 2023, coinciding with the release of its latest enforcement and regulatory report (Report 757). The update provides further clarity and insight for regulated entities into the corporate regulator's approach and focus areas for 2023.
"Expanded" enforcement priorities for 2023
ASIC's enforcement priorities for 2023 will have a "strong focus" on:
- sustainable finance practices and disclosure of climate risks (greenwashing);
- financial scams;
- cyber and operational resilience; and
- investor harms involving crypto-assets.
This update signals an expansion on ASIC's enforcement priorities for 2023 which were announced on 3 November 2022. Those priorities included poor design, pricing and distribution of financial products; governance and directors' duties failures; misconduct in the superannuation and insurance sectors; misconduct involving crypto-assets; investment scams; and market manipulation.
"Expanded" areas for ASIC enforcement
ASIC's release is consistent with its focus in the two emerging areas of "greenwashing" and DDO obligations:
- In October 2022, ASIC commenced its first greenwashing enforcement action. Between July and December 2022, ASIC issued infringement notices to three entities for misleading sustainability-related statements.
- An emerging area of focus for ASIC appears to be on Design and Development Obligations. ASIC issued 22 DDO "Stop Orders" to entities during the period to prevent consumers and investors being targeted by products that are inappropriate to their objectives, financial situation and needs. In December 2022, ASIC commenced civil penalty proceedings alleging DDO breaches against American Express in relation to two co-branded David Jones American Express cards.
Notwithstanding this new focus, ASIC has remained an active litigant in other sectors, commencing a key enforcement against former Star Entertainment Group Limited directors for alleged breaches of Director and Officer duties involving money laundering risks in December 2022.
Enforcement activity and penalties
During the period, a total of $76.3 million in civil penalties were imposed by the Courts, bringing the total civil penalties imposed in the 2022 Calendar Year to $222.1 million. Speaking on ASIC's enforcement activity in the final quarter of 2023, ASIC Deputy Chair Sarah Court commented that ASIC had commenced significant enforcement and regulatory actions in the final quarter of 2022 "to address misconduct, market integrity threats and consumer harms" across the financial services, retail and crypto-assets sectors, including in relation to corporate governance and directors' duties, product design and distribution, and misleading statements involving sustainable finance practices.
This included a $25 million penalty imposed by the Federal Court against ANZ in October 2022 for failing to provide benefits it had agreed to give customers with offset transaction accounts or under a "Breakfree" package.
Regulatory developments timetable
For the first time, ASIC has issued an interactive regulatory developments timetable which lists ASIC's proposed timeframes for regulatory work including the publication of draft or final guidance, or the anticipated making of a legislative instrument. ASIC signalled its intention that the timetable be published every six months, and not be amended between updates.
The timetable lists 18 initiatives planned between January and March 2023, five initiatives between April and June 2023, and 4 from July 2023 and beyond. It includes ASIC's expected actions to relevant initiatives, including consultation, updates to regulatory guides, issuance of information sheets or user guides, or implementation of rules made.