Litigation still on the cards for ASIC

The corporate regulator has highlighted to a parliamentary committee that it would remain an active litigator despite it not placing as much public emphasis on the ‘why not litigate’ mantra.

The Australian Securities and Investments Commission (ASIC) chair, Joe Longo, said in response to recent media claims, there would not be any let up or lack of commitment to litigation and its commitment to “credible active law enforcement” was not going to change.

“I think the critical question is that we litigate the right matters and that we take full advantage of the full range of enforcement and regulatory tools that are available to us under the law. So, I'm personally not concerned at all in ASIC's commitment to enforcement,” he said.

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When asked whether the regulator would take a binary or cooperative approach with companies Longo said it would not be binary.

“We're here to help businesses comply with the law and we will try to issue guidance and information sheets and the matters of that nature to help businesses comply with the law. Our operating assumption is that if people want to cooperate with us and comply with the requirements then that's what we would prefer,” he said.

“But we have a strong enforcement function as well, because as we know, there are individuals and companies that don't always comply with the law. We are equally committed to ensuring that consumers and investors who were exposed to the wrongdoing or breaches of the law and dealt with so it's certainly not binary.

“Between the commissioners and our senior staff continuous interactions with industry bodies, the banks, consumer groups, we all have a view to ensure that engagement contributes to us being an effective, informed, and in touch regulator.”

Longo noted that ASIC was also working towards a digital strategy aimed at investing in its technology.

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It's not just litigation. That is at one end of the spectrum and some litigation is necessary. What is really annoying for licensees, is time consuming, costly to resource and adds no value to the advice process are the constant ASIC information requests and box-ticking exercises. I get ASIC is resourced up to the eye balls and we need to keep all the public servants busy but make it useful activity such as communicating to the industry how we can work practically with the FASEA Code (and Standard 3 particularly). If a structure is put in place that means the adviser is not paid a referral fee but instead an interposed entity (of which the adviser is director and shareholder) receives the same referral fee, the adviser may now also be in breach of Standard 1. ASIC needs to update and re-release RG244 to better explain how scaled advice can best be delivered and fully comply with Standard 6. ASIC needs to produce guidance on how to best structure advice to meet the safe harbour provisions and also the Code requirements while trying to reduce paper and increases access to and affordability of advice. Then there is the freight train heading towards us with breach reporting, IDR and DDO (the latter which has to be the biggest and most wasteful box ticking exercise of all). Lets move from useless box ticking to helpful and practical partnership with the industry which will benefit both the regulator and the practitioners.

The regulator also needs to ensure the laws are applied equally. If litigating one licensee ensure the bar is consistently applied across the board. All for one and one for all. Don't play favourites.

"They'll remain an active litigator"....funny...Except if you're AMP...(not in the public interest to litigate)...or an Industry Super Fund..(politically too risky)...or on Tik Tok....(too hard)..or providing unlicensed advice...(too easy)...anything to do with BitCoin...(too complex) I guess the only litigation they'll be doing is Adviser's and licensee's providing face to face advice..

Ha ha! Fantastic response!

"“We're here to help businesses comply with the law and we will try to issue guidance and information sheets and the matters of that nature to help businesses comply with the law. ..."
I call BS to that statement.

Of course they will litigate, there is no risk or consequences for them. Advisers fund the action, and if it fails they simply put their hand out for more funding. It doesn't matter if the action will result in a better outcome for clients, they simply want to justify their existence. Further ASIC isn't interested in giving guidance as they claim. If they were they would produce templates that the whole industry could use that meet various regulations. Instead they provide unclear guidance, let lawyers create 90 page SOAs, and tell you later you got it wrong so they can prosecute you.

Why wouldn't they litigate; they don't pay for it. Advisers do. ASIC and the government have no downside.

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