On 3 November 2022, Deputy Chair of ASIC Sarah Court announced the corporate regulator’s Enforcement Priorities for 2023. In a speech earlier that same day, Chair Joe Longo declared “enforcement has been, and always will be, at the heart of ASIC’s work”. This new style of publicly unveiled ASIC enforcement priorities signals both the corporate regulator’s commitment to regulatory action and where its resources and expertise will likely be directed in subsequent years.
ASIC’s twelve enforcement priorities for 2023 are as follows:
- Enforcement action targeting poor design, pricing and distribution of financial products including in relation to insurance, superannuation and other investment products and credit. In this regard we refer to our alert on 7 November 2022 “ASIC flexing its DDO powers and cracking down on Target Market Determinations” which can be found here;
- Misleading conduct in relation to sustainable finance including greenwashing
- Misconduct involving high risk products including crypto assets
- Combating and disrupting investment scams including working with other regulators, industries and social media platforms to reduce consumer harm
- Protecting financially vulnerable consumers impacted by predatory lending practices or high-cost credit including conduct by unlicensed or fringe entities
- Misleading and deceptive conduct relating to investment products which obscures the risk, performance or nature of financial products
- Misconduct in the superannuation sector including misleading conduct and poor governance
- Failures by providers of general insurance to deliver on pricing promises to consumers
- Misconduct that involves misinformation through social media about investment products, including ‘finfluencer’ conduct
- Governance and director’s duties failures including those related to property schemes that expose investors to significant loss
- Manipulation in energy and commodities derivatives markets
- Unfair contract terms including in insurance products.
According to ASIC, these priorities reflect ASIC’s three enduring areas of focus being protecting consumers, responding to emerging issues, and maintaining market integrity. Set out below is a trends update which shows the number of investigations commenced by ASIC, new criminal litigation commenced by ASIC and the dollar value of civil penalties from 2010 to 2022.
Earlier this year, we analysed ASIC’s four main external priorities from its 2022 Corporate Plan, released in August 2022. These priorities were described as targeting “the most significant threats and harms in our regulatory environment” and are associated with corresponding ‘actions’ to be undertaken by the corporate regulator, including, but not limited to, enforcement. The external priorities for 2022 are:
- Product design and distribution – reduce the risk of harm to consumers of financial and credit products, caused by poor product design, distribution and marketing, especially by driving compliance with new requirements
- Sustainable finance – support market integrity through proactive supervision and enforcement of governance, transparency and disclosure standards
- Retirement decision making – protect consumers, especially as they plan and make decisions for retirement, with a focus on superannuation products, managed investments and financial advice
- Technology risks – focus on the impacts of technology in financial markets and services, drive good cyber-risk and operational resilience practices, and act to address digitally enabled misconduct, including scams.
The enforcement priorities for 2023 are consistent with the 2022 external priorities as both focus on protecting consumers from risks associated with financial, credit and superannuation products. Notably, the enforcement priorities emphasise a particular focus on insurance product regulation. Providers and distributors of insurance to consumers should be on notice that ASIC has now made clear its intentions to dedicate enforcement capabilities to the sector, particularly regarding pricing.
ASIC’s external priorities of sustainable finance and technological risk are also reflected in the Enforcement Priorities for 2023. These clearly indicate that ASIC intends to crack down on greenwashing and misconduct involving crypto and ‘finfluencers’. ASIC recently published three relevant information sheets in relation to these matters:
- INFO 271 on ‘How to avoid greenwashing when offering or promoting sustainability-related products’, issued June 2022
- INFO 269 on ‘Discussing financial products and services online’, issued March 2022
- INFO 225 on ‘Crypto-assets’, reissued October 2021.
The issue of energy derivatives market manipulation is also a new area of focus for 2023. Traders of energy derivatives should be aware that that market has been identified as of importance to ASIC in 2023 for enforcement purposes.
The ASIC Enforcement Priorities for 2023 also comprise five ‘enduring’ priorities not specifically prioritised in 2023, being:
- Misconduct damaging to market integrity including insider trading, continuous disclosure breaches or failures and market manipulation
- Misconduct impacting First Nations people
- Misconduct involving a high risk of significant consumer harm
- Systemic compliance failures by large financial institutions resulting in widespread consumer harm
- New or emerging conduct risks within the financial system.
It is a welcome development that ASIC has now openly communicated its enforcement priorities to industry and stakeholders.
