With the regulator announcing its enforcement priorities for 2025 last week, law firm Hall & Wilcox examines which areas did not feature this time round.
In a statement on 14 November, ASIC unveiled a slew of new enforcement priorities for the year ahead where it intends to direct expertise and resources.
Namely, these are:
- Misconduct exploiting superannuation savings.
- Unscrupulous property investment schemes.
- Failures by insurers to deal fairly and in good faith with customers.
- Strengthening investigation and prosecution of insider trading.
- Business models designed to avoid consumer credit protections.
- Misconduct impacting small businesses and their creditors.
- Debt management and collection misconduct.
- Licensee failures to have adequate cyber security protections.
- Greenwashing and misleading conduct involving ESG claims.
- Member services failures in the superannuation sector.
- Auditor misconduct.
- Used car finance sold to vulnerable consumers by finance providers.
According to Hall & Wilcox, the list includes some notable inclusions and omissions this year.
New priorities that made their debut include unscrupulous property investment schemes and licensee failures to have adequate cyber security protections.
But there are other areas affecting financial advisers and licensees that are no longer viewed as a priority this year in the way they had been in previous years.
The Australian law firm also identified: “Two significant priorities that do not feature in the current list are poor distribution of financial products and compliance with the reportable situation regime.”
The removal of the latter may indicate that ASIC has found Australian Financial Services Licensees (AFSLs) to be more compliant with the reportable situation regime.
This regime requires licensees to submit reports of any breaches and is used by ASIC to identify any emerging trends and detect non-compliant behaviour.
In late October, the regulator released its latest breach reporting data which covered reports made by AFSLs and credit licensees from July 2023 to June 2024.
During the period of FY24, licensees submitted 12,298 reports, which was a decline of 27 per cent from the previous corresponding period. This decrease was due to a greater uptake by licensees in grouping similar breaches into one report and a decrease in reportable situations relating to misleading or deceptive conduct provisions and the false or misleading statements provision.
The data showed that while small licensees may have improved their reports, the regulator still believes they are under-reporting.
Richard Hopkin, senior associate at Cowell Clarke, said: “It is still possible that licensees are under-reporting. I don’t think it’s necessarily a reluctance to report – I think the sensitivity and complexity of the regime mean that while incidents are identified and rectified without much fuss, licensees don’t necessarily realise that those (relatively minor) incidents are actually automatically reportable. That said, in my experience many mature smaller licensees don’t have that many material incidents in the course of a year.”
Additionally, ASIC chair Joe Longo later confirmed the thoughts of many advisers that the reportable situations regime is too complicated.
In a speech in the regulator’s annual forum in Sydney on 14 November, he said: “One of the challenges we have encountered in administering and enforcing the regime has been the number of modifications, and the number of pages of guidance that have been required to help industry meet their obligations and ensure the regime meets its objectives – in other words, to make it work.
“In short, the complexity of that regime is affecting how we translate its intent to get the full benefit.”
