ASIC’s Latest Enforcement Report: The key focus areas to be aware of

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Digital disruption, cyber threats and inappropriate targeting of retail clients continue to guide ASIC’s approach to enforcement.

During the period 1 January to 30 June 2017, ASIC:

  • Commenced 57 investigations;
  • Removed 23 individuals from financial services;
  • Charged 5 people in criminal proceedings;
  • Issued 11 infringement notices; and
  • Ordered $618.8m in compensation/remediation.

The enforcement report released by ASIC on 22 August 2017 focuses on the key risks to consumers of financial services that ASIC has identified and which inform ASIC’s enforcement action. These key risks include:

Digital Disruption

The rapid changes and technological developments which have occurred in the financial markets over the past year have seen ASIC focus increasingly on the challenges this poses for their regulatory and enforcement action. ASIC’s primary concern is that new products and service delivery models are implemented and operated in a way that protects consumers and does not undermine market integrity. ASIC has developed initiatives such as the Innovation Hub and Regulatory Sandbox to assist businesses utilising new technologies. It’s important for players in the financial services industry who are utilising new technologies to consider their licensing and compliance obligations under the law to ensure they are appropriately authorised to provide the services.

Cyber Threats

ASIC continue to focus their enforcement action on the risk from cyber threats. In consultation with other regulators, ASIC are seeking to ensure cyber threats do not destabilise the market and erode trust and confidence in Australia’s financial system. In addition to their reporting obligations under the AML/CTF legislation, licence holders should ensure all employees and representatives are aware of the risks of cyber threats and ensure their business has adequate risk management procedures in place to identify, monitor and manage these risks.

Gatekeeper Culture

ASIC is concerned with ensuring AFS Licensees and credit licensees provide their services in a way which promotes trust and confidence in the Australian market. Specifically, ASIC is focused on the culture and incentives that result in the provision of poor financial advice, irresponsible lending and miss-selling to retail investors. ASIC has obtained civil and criminal penalties during the first half of 2017 against gatekeepers in respect of their conduct. Licensees should ensure they have robust compliance procedures which are tailored to their business in order to maintain a culture of compliance among all employees and representatives.

If you need assistance with your interaction with ASIC, AUSTRAC or FOS please contact us for further information.

About The Author

Alicia Pevely

Alicia works across both Sophie Grace Pty Ltd and Sophie Grace Legal Pty Ltd with a particular focus on compliance and legal services. She manages the licensing and compliance aspects of the business. She is responsible for AFSL and ACL applications, variations and assists the compliance team in the implementation of compliance reviews. She provides ongoing compliance support and assists with the preparation of legal advice, commercial agreements and disclosure documents.  

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