ASIC new enforcement approach more targeted and proportionate

The corporate regulator’s end to its ‘why not litigate’ regime to be more targeted and proportionate in its range of enforcement power is a welcome development, according to a law firm.

An analysis by Hall and Wilcox Lawyers partner, Jacob Uljans, said the new approach would allow the Australian Securities and Investments Commission (ASIC) to continue to take appropriate action in response to egregious and harmful misconduct, while allowing for more balance in responding to technical or inadvertent contraventions where the entity concerned had promptly remediated any persons impacted.

“We also expect this will assist in facilitating productive engagement during investigations between the corporate and financial services regulator and those entities it regulates,” he said.

Last week, ASIC published its corporate plan which said it would continue as an active litigator against misconduct but that litigation would be reserved for cases involving the most substantial harm to market integrity, investors and consumers.

“In addition to the fundamental change in enforcement approach, the new corporate plan provides further insight into ASIC’s areas of focus regarding regulatory investigations and enforcement,” Uljans said.

“Of note for financial services businesses is ASIC’s new focus on marketing and disclosure by investment managers, with ASIC intending to proactively review product disclosure statements issued by entities with a history of poor disclosure, and on pricing misconduct in the general insurance sector, including miscalculation of premiums.

“Superannuation fund trustees will also be potentially exposed to regulatory action for non-compliance with mandatory fund underperformance notifications related to the Your Future, Your Super reforms.

“Products that exploit consumers by offering little or no benefit, poor debt collection practices and misconduct regarding product intervention orders are also areas of focus for ASIC from an enforcement perspective.”

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