ASIC enforcement update 18-19

ASIC has used its update on enforcement outcomes during the period 1 July 2018 to 31 December 2018 to highlight recent changes in its enforcement approach and its priorities.

Why not litigate?
ASIC has adopted a ‘why not litigate?’ enforcement stance and begun the process of establishing an Office of Enforcement.
ASIC Commissioner Sean Hughes has explained the policy:

“In 2019, ASIC will have a greater focus on court-based outcomes to provide strong public denunciation and punishment of wrongdoing. We will start by asking ‘why not litigate?’ While we recognise that in some cases other regulatory actions may be a better targeted and appropriate response —and we certainly cannot litigate all the breaches and reports of misconduct we receive—general and specific deterrence require the sanction of a court.”

The Office of Enforcement will:

  • investigate and take enforcement action where there are contraventions of the laws ASIC regulates;
  • centralise enforcement decision-making processes using the ‘why not litigate?’ enforcement stance;
  • functionally separate enforcement teams, as much as possible, from non-enforcement related contact with regulated entities.

The Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act 2019 allows ASIC to pursue substantial civil penalties and criminal sanctions against banks, their executives and others who have broken the law. The changes mean individuals now face up to 15 years jail and companies can receive maximum fines of up to $525 million.

Strategic priorities for enforcement
ASIC says it is focusing on:

  •  potential harms from technology driven by the growing digital environment and structural changes in financial services and markets;
  • poor culture and professionalism in financial services and credit, particularly in the provision of consumer credit and financial advice;
  • culture, governance and incentives that can harm markets;
  • practices that target financially vulnerable consumers;
  • misalignment of retail product design and distribution with consumer needs.
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