ASIC signals litigious intent

The Australian Securities and Investments Commission has issued a clear signal that it may become more litigious as it seeks to reshape itself in the wake of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Commission.

ASIC chairman, James Shipton has released to the Joint Parliamentary Committee on Corporations and Financial Services the terms of reference for a Review into ASIC’s Enforcement Policies, Processes and Decision-Making Procedures which has canvassed greater use of legal test cases.

Shipton reinforced with the committee that there was “a demonstrable need for ASIC to immediately accelerate its interventions, supervision and enforcement in financial services and credit”.

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He said the Royal Commission’s interim findings had clearly suggested that ASIC was expected to:

  • “Pursue higher and more meaningful penalties in court. This is what current draft legislation will give us. In addition, we will be able to seek disgorgement of profits. With both higher penalties and disgorgement, there will be an even greater deterrence impact from court outcomes.
  • Intervene more proactively when financial products cause detriment. This is what the product intervention power will give us.
  • Enforce the obligation that financial products need to be designed and distributed with the end consumer in mind (instead of the financial institution). This is what the design and distribution obligations will give us.
  • A directions power would enable us to reform and remediate without negotiating with the wrongdoer.” 

The ASIC review document tabled by Shipton describes the review as being “forward-looking and designed to identify what changes should be made to the Enforcement Policies aligning with internal and external expectations”.

It said the review would particularly focus on policies, processes and decision-making procedures relevant to:

(a) Whether or not to enforce the law using criminal and civil proceedings or other regulatory options; and

(b) The effectiveness and timeliness of the conduct of litigation and of enforcement outcomes. 

The document also discusses reviewing the weighting of ASIC’s enforcement goals of:

(a) specific and general deterrence;

(b) punishment/punitive effect;

(c) remediation; and

(d) public denunciation.


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I hate it when the cost of my Toll road Fee goes up on the way to work. So paying money to ASIC is just a cost of doing business, it won't make me change the way I operate.

As usual I've got to go I've a full calendar a head. I own a couple of white labled dealer groups you see, and I need to make those advisers put more money into our in-house platform (note to self...tell Senior Managers at all cost lift profit by 18% and make it happen or there fired)....and...slip a few bucks to ASIC and slip the FPA a few dollars on the side....then issue a press release blaming advisers for poor conduct. ...Afternoon..sit back count my profits, smoke a cigar and watch advisers face more red tape, increase fees and go through FASEA. I don't pay for that.

ASIC signals litigious intent? Seriously.
What it is admitting is that it hasn't been doing it's job in the past.
They should be held to account for their previous bad behaviour just as much as those in the greedy organisations who have brought the sector into such disrepute. The Government clearly needs to examine the role of all of the regulatory bodies and put someone like Allan Fels in charge. Quietly spoken, but very insightful and certainly prepared to take firm action when necessary.

Yep Mr Shipton. There's an admission of past failures. But you took the money anyway!
The banks got off and the advisers got thrown under the bus because they were an easier target.
Rather than persecute, why not try a different more humane tact? Work with people instead of being bully boy and doing the dirty work of the banks and life offices who are looking to squeeze more profits out of the consumers.
You are killing the golden goose who has been more than prepared to put house, life and reputation on the line to help people. Even people like you!
But you cut them down without a second thought in the line of fire because you want to be proud to be seen doing your job. Picking all the low hanging fruit!
Typical public servant. May as well be a politician! Lies, damned lies and more lies!

ASIC is making a telling admission here. But what worries me most is what will be litigated and against whom. ASIC has a shocking track record of failure when it comes to litigation (the One Tel case comes to mind.) Can you see ASIC successfully taking on the banks and AMP and winning?

Or is it more likely that it will take on the adviser and simply grind them into the dust with legal warfare to prove its doing its job, with the Bank's doing their normal trick of saying "one rotten egg, one rotten egg".

When ASIC says it will be more litigious, I don't see how any employee in the industry will feel safe. Particularly, after its regulatory capture has been laid bare for us all to see.

We need a new regulator, one that will put the fear of god into the banks and AMP.

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