The first ASIC Annual Report published under ASIC’s new chair, James Shipton, emphasises ASIC’s mission in changing behaviours to drive good consumer and investor outcomes, and to act against misconduct in order to maintain trust and integrity in the financial system.
During 2017 – 18, ASIC conducted 1,200 surveillances and 124 investigations. Through surveillance, ASIC identified and addressed 938 cases of failures, or likely failures to comply with regulatory obligations in the deposit-taking and credit, financial advice, investment management, and superannuation sectors, as well as the corporations, market infrastructure and intermediaries sectors. ASIC’s supervision focussed on a wide variety of areas within these sectors including:
compliance with responsible lending obligations by lenders;
compliance by credit licensees with content obligations in credit advertising;
deficiencies in financial services and product disclosure documentation;
misleading or deceptive advertising and representations;
preventing inappropriate conduct by responsible entities, superannuation trustees, fund managers and wholesale trustees and custodians; and
compliance by financial advisers and their licensees with the financial advice obligations, including the best interests duty and the ban on conflicted remuneration.
Key regulatory outcomes listed in the Report include securing admissions from three of Australia’s big four banks over unconscionable conduct in respect of the bank bill swap rate, and significant changes made to practices in the add-on insurance sector. This included the payment of compensation to consumers, which totalled over $122 million. ASIC are progressing with the development of regulatory technology, also known as ‘regtech’, to improve the efficiency of compliance.
Enforcement action remains one of ASIC’s most important regulatory tools for achieving a strong and efficient financial system. In 2017–18, ASIC completed 111 civil court proceedings relating to dishonest conduct, false or misleading statements, breach of licence obligations, failing to comply with continuous disclosure obligations and unconscionable conduct. Of these, 99% were successful for ASIC, with the amount of penalties totalling $42.2 million, a significant increase from the total amount of $5.2 million in civil penalties during 2016-17. Amongst these proceedings were matters involving ANZ, Westpac, NAB and CBA.
ASIC banned, removed or restricted 92 people or companies from providing financial services during 2017-18. The number of court enforceable undertakings increased to 27 in 2017-18, compared with 16 during 2016-17. With a focus on efficiency, ASIC reduced the average time for an administrative decision from 27 months in 2016-17 to 5 months in 2017-18. ASIC continue to prioritise taking enforcement action to ensure that consumers are appropriately compensated, which in 2017-18 resulted in the payment of $351.6 million to consumers in compensation and remediation.
Going forward
In 2018-19, ASIC will continue to focus on identifying and addressing the harms and behaviours that threaten trust and integrity in the financial markets in the aftermath of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
After the recent Government announcement of an additional $70.1 million in funding for ASIC in August, ASIC are exploring ways to improve the efficiency of enforcement processes. This includes increasing the use of e-surveillance, e-investigation and e-discovery for investigation and discovery of breaches. The acceleration of these enforcement activities, and the increasing use of regtech in compliance, will be strategic priorities for ASIC moving forward.
If you would like to discuss anything in the Report, please contact Hillary Ray or Elaine Wilson.