Australian Securities and Investments Commission chair Joe Longo wants to make one thing perfectly clear: the corporate cop is well and truly on the beat and is ready, willing and able to take people and companies to court if it sees wrongdoing.
After more than three years under Joe Longo’s leadership, ASIC’s latest “corporate plan”, released on Thursday, outlines the actions it has been taking.
“ASIC is one of Australia’s most active law enforcement agencies,” he says in the report.
“We are in court nearly every day of the year to hold those who breach the law to account and to deter misconduct.
“Last year, we significantly increased our number of new investigations and many of those matters will result in important compliance and enforcement outcomes in the year ahead.”
ASIC’s report notes that it is “committed to pursuing high penalties and sentences through the courts, so that the cost of breaking the law has a material impact on companies and individuals”.
ASIC, Longo wants to make clear, does not have the resources to take up every case of corporate wrongdoing, nor is it a complaints resolution body.
But the cases it does take up are designed to “hold individuals and companies to account” and “to deter future misconduct”.
“We want to achieve outcomes which reverberate across the market,” the report declares boldly.
In a briefing for journalists in Sydney on Wednesday, part of Longo’s new era of glasnost, he argued that ASIC was now undertaking more actions against companies per head of population than the powerful US Securities and Exchange Commission.
While ASIC has a broader regulatory remit than the SEC (some might argue it is too broad), it is a significant point to make – and a point Longo wants to reinforce to the media and the general public – as well as to those in parliament who might argue the corporate cop is not doing enough.
ASIC’s corporate plan notes that it started some 170 new investigations over the past year – an increase of 25 per cent, with 33 civil proceedings launched in the Federal Court – an increase of 27 per cent over the previous year.
Its investigations have led to 18 criminal convictions and resulted in another 23 people being charged by the Commonwealth Director of Public Prosecution for criminal offences.
Longo plans to expand the areas ASIC will be monitoring.
Looking forward, ASIC says, it will be taking a more active look at maintaining the integrity of the financial markets – no doubt one of the forces behind its recent action against the ASX for allegedly misleading its investors on the true state of its plans to replace its CHESS clearing and settlement system. It will also be looking at the increasing role of private markets in the Australian financial system and the emergence of new financial products.
The strategic priorities it has outlined in the plan include improving consumer outcomes, addressing financial system climate change risk, better retirement outcomes and member services in the superannuation sector, making sure that businesses have cyber and operational resilience, fighting technology-enabled scams and “driving consistency and transparency across markets and products”.
It is a big ask for an already busy regulator, but, as Longo says, it is about priorities.
One area which will come under the harsh light of closer scrutiny from ASIC will be superannuation – an area which has traditionally been under the regulatory remit of the Australian Prudential Regulation Authority.
As the amount of money in superannuation continues to rise – now almost $4 trillion – and as the population ages, ASIC is making it clear it is going to take a closer look at how well super funds serve their customers.
The corporate plan says ASIC will “continue its multi-year project, reviewing (superannuation) industry compliance laws relevant to contact centres and trustee administration practices”, including a review of the handling of death benefit claims.
“Where we identify poor conduct, we will take enforcement or other regulatory actions,” it warns.
Other areas of scrutiny related to superannuation include taking action against “cold calling switching models” which encourage people to switch their super to another provider in a way which may adversely impact their super, personal advice provided to retail clients about setting up self-managed super funds and how well super funds handle complaints by members. ASIC will also continue to monitor the implementation of the retirement income covenant by super fund trustees.
Some might argue that in doing this, ASIC is moving into the territory better administered by APRA. ASIC is clear that in some cases, it will work closely with APRA when it comes to superannuation, with each carving out their own regulatory niche.
Either way, super fund trustees have been warned that the corporate cop is now on their case as well.
Greenwashing is another area where ASIC has already taken several high-profile cases against super providers and it is signalling that it is prepared to do more.
There is a lot in ASIC’s new corporate plan. It has set itself an ambitious, broad remit of future interest as well as reminding the public it has stepped up its game when it comes to court action.
While he has been in his role just over three years, Longo is one of the longest-serving ASIC commissioners. In that time he has overseen the arrival of a new team of commissioners, restructured the organisation and is now appointing a new team of senior executives. The house that Joe has built is now in place, with bold ambitions outlined in its latest corporate plan.
A broader range of stakeholders have now been put on notice by ASIC and the public, as well as the corporate and broader financial sector, will be watching this space.
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