Government eyes greater ASIC powers as regulator reveals investigations against big four

  • By AB+F Editorial

The Federal Treasurer Josh Frydenberg has sought consultation on draft legislation that will give the corporate regulator greater enforcement powers. 

The move is part of the recommendations in the ASIC Enforcement Review Taskforce and consistent with the government’s focus to deliver on its comment to ensuring trust following the Royal Commission. 

The draft legislation aims to strengthen ASIC’s licensing powers by increasing standards required of an Australian Financial Service Licence (AFSL). 

It will also align the penalties for false and misleading statements in both the AFSL as well as in Australian Credit License applications. 

ASIC’s powers will also be extended to that the regulator can ban a person from performing functions in a financial services or credit business. 

The legislation also expands the grounds on which ASIC can issue banning orders.

ASIC's Search Warrant powers will also be harmonized across different Acts and brings them into line with the search warrant powers in the Crimes Act.

The legislation will also pave the way for interception agencies to provide lawfully intercepted information to ASIC for serious offences that ASIC can investigate or prosecute.

“The exposure draft legislation is further evidence of the Government’s commitment to strengthening financial regulators like ASIC and restoring trust in the financial system as part of our plan to build a stronger economy,” Treasurer Josh Frydenberg said in a statement.

Consultation on the draft legislation closes on the 9 October. 

ASIC update

On Tuesday, ASIC also provided its second update on its actions in response to the Royal Commission. 

“This Update, outlining as it does the progress in pursuit of ASIC’s renewed enforcement mandate, should indicate the sense of urgency and significance that the ASIC Commissioners and staff are bringing to the task,” ASIC chair James Shipton said.

“It also demonstrates that we will continue to use all of the regulatory tools at our disposal to deliver a fair, safe and efficient financial system for all Australians.” 

As already made public, there are 13 referrals that ASIC has received from the Royal Commission – all under investigation with one in litigation. 

The Royal Commission also examined a number of case studies. 

From these case studies, ASIC has 29 investigations underway (some with external counsel involvement). 

Four matters are before the court (Select AFSL, Dover and two matters relating to NAB), another two matters are being considered by the Commonwealth Director of Public Prosecutions (CDPP) for potential criminal action.  

Prior to and during the Royal Commission, ASIC already had a number of referrals and case studies under investigation. 

The regulator now has 17 case studies under review to determine if investigations are warranted or enforcement action is available to ASIC. 

As at 31 July 2019, within this dedicated enforcement program, there were 88 enforcement investigations and 17 court actions underway. 

Of these, 86 relate to the major banks and AMP, and their subsidiaries. 

In addition, 59 individuals are the subject of investigation and eight individuals were the subject of court action. 

A total of 82 outcomes had been achieved, including criminal, civil and administrative actions, and court enforceable undertakings

Since October 2018, on-site rite reviews regarding its close and continuous monitoring program has seen ASIC staff on-site at the major banks and AMP for 164 out of 222 working days, and involved meeting with more than 550 banking staff at all levels. 

According to the report, two early areas of focus have been breach reporting and complaints handing. 

ASIC will also soon be publishing the Taskforce’s first report, which focuses on director and officer oversight of non-financial risk in seven large financial services companies. 

This will be followed by the release of a report on executive remuneration practices in the 21 companies by the end of 2019. 

In preparing these reports, the taskforce reviewed over 43,000 documents and completed 97 interviews with boards and management.