PKF Australia

Accountants and Business Advisers

ASIC’s latest enforcement report is out – be ready

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Scott Tobutt


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ASIC’s latest enforcement report is out – be ready

ASIC (Australian Securities and Investments Commission) has recently released a detailed report of enforcement outcomes for the first half of this year which has a big focus on the financial services sector. The report also comes with a heads up about intended focus areas in the second half of this year.

ASIC’s aim is to address various long-term challenges which recognise the need to maintain high levels of conduct, trust and integrity in the financial services market. Being a market and financial system which continues to evolve, change structure and become more complex due to ongoing innovation, digital disruption and cyber resilience, and globalisation.

Based on these challenges, the priorities and key risks for the period just covered include the following:

  • Gatekeeper culture and conduct in financial services and credit
  • Gatekeeper culture and conduct in markets
  • Digital disruption
  • Cyber threats
  • Misalignment of retail product design and distribution with consumer understanding
  • Cross-border businesses, services and transactions

These key risks had a particular focus on how inappropriate culture and incentives could drive poor conduct and financial advice, and could compromise integrity, trust and confidence in the financial system.

The following is a summary of the resulting enforcement actions undertaken by ASIC for the first half of FY 17/18.

  • Investigations commenced - 57, persons charged in criminal proceedings - 5
  • Investigations completed - 80, criminal charges laid - 32
  • Individuals removed from financial services - 23, infringement notices issued - 11
  • Compensation/remediation - $618.8m, infringement notices paid - $1.4m
  • Persons charged in summary prosecutions for strict liability offences - 203, criminal charges laid in summary prosecutions for strict liability offences - 399

    Furthermore, there has been specific attention paid to the financial services field. ASIC removed 23 financial services individuals and has reported a total of 145 instances of misconduct including five criminal incidents.

    For the next six months, ASIC has stated its commitment to focus on higher standards in the financial services industry, paying particular attention to:

    • Conduct risk and integrity;
    • Corporate governance;
    • Responsible lending practices;
    • Financial advisers’ compliance with best interest duties;
    • AFS (Australian Financial Services) licensees’ failure to deliver ongoing advice services to financial advice customers who are paying fees to receive those services;
    • Misleading and deceptive conduct; and
    • AFS licensees that claim to provide general advice but instead provide personal advice.

    ASIC will also be focusing on the culture and incentives that result in poor financial advice, which can undermine trust and confidence in the financial system.

    With a continued major focus on the financial services sector, we recommend that lenders, financial advisers and licensees continue to invest time and resources into ongoing development and improvement of their risk management framework, organisation governance and culture, and compliance systems, processes and procedures. This could be through training and development of staff, dedicated risk resources internally, independent assessments and advice from external experts (e.g. accounting and law firms) and improved tools such as compliance portals and Enterprise Risk Management systems. Ultimately all this needs to be underpinned by a commitment, and strong tone set by those at the Board and key management levels.


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