ASIC unveils regulation hit list, targets private markets, greenwashing

Private companies will face increased scrutiny as their ‘opacity presents an outsized risk’, says ASIC as it sets out its targets for the year ahead.

Joseph Longo, Chair and Accountable Authority, The Australian Securities and Investments Commission (ASIC). John Feder/The Australian.

The corporate regulator has revealed its targets for the year ahead, warning it will pursue misconduct and poor service across superannuation and ­financial services.

Publishing its strategic priorities on Thursday, the Australian Securities & Investments Commission warned it was assembling new teams to tackle concerns around private markets and emerging climate reporting requirements.

ASIC said its priorities spanned five key areas, including improving consumer outcomes, addressing financial system risks from climate change, and delivering better retirement outcomes for super fund members.

The corporate regulator, which regulates the conduct of Australian businesses, said it would also look to scrutinise digital and data resilience and safety and push for consistency and transparency across public and private markets.

ASIC chair Joe Longo said the regulator would ensure the integrity of financial markets, noting they were “core to ASIC’s remit”.

“Trust in the financial system and markets means greater confidence, which means more investment,” he said. “That has direct benefits for the jobs and opportunities of Australians.”

ASIC noted that over the coming year it would look at Australia’s financial markets, both listed and unlisted, as well as large companies and super funds.

It will examine growing credit markets and their engagement with investors, as well as small credit lenders and their compliance with the law.

“While Australia’s private markets are dwarfed in size by our listed equity markets, their opacity presents an outsized risk to market integrity, particularly as more investors become exposed,” Mr Longo said.

“The addition of a new strategic priority aimed at driving consistency and transparency across markets and products puts all market participants on notice.”

ASIC said it would monitor how financial services and credit companies were using AI and data analytics.

Financial hardship assistance and dispute resolution would face scrutiny.

Insurers will be put under the microscope by ASIC, which will examine their claims handling, potential harmful product design and distribution of life insurance.

Mr Longo said ASIC had refined its approach over the past three years, but noted the regulator’s strategic priorities remained consistent.

“Our updated corporate plan demonstrate how we are evolving and adapting to the changing needs of our operating environment,” he said.

ASIC flagged it would continue with its greenwashing enforcement push, after prioritising the area last year.

ASIC won its greenwashing cases against financial giants Vanguard and Mercer earlier this year, with the Federal Court finding the two companies made misleading statements to investors.

The Australian Securities & Investments Commission (ASIC) (L-R) Tim Mullaly, Joe Longo, Simone Constant, Alan Kirkland and Kate O’Rouke in Sydney for a Parliamentary hearing. Jane Dempster/The Australian.

ASIC said it would also look at the integrity of the energy and carbon markets, noting plans to update its policies regulating disclosure around carbon-based financial products as well as monitoring markets “to ensure markets and intermediaries are meeting the highest standards”.

This comes as ASIC assembles a new team to develop its regulatory guidance and assess compliance with new emissions reporting obligations under proposed laws.

ASIC said it was also prioritising conduct in the retirement system, warning it would bring action against funds failing to provide services to members or prevent harm.

The regulator flagged it would take enforcement action against funds using cold-calling to attract new members and switch retirement savings resulting in “the inappropriate erosion of superannuation”.

ASIC said it would also look at the quality of advice being provided to self-managed super funds, warning “we will take enforcement or other regulatory action against misconduct”.

The regulator also flagged a review of outsourcing and offshoring of services by financial advisers and investment managers. This will see ASIC look at how these providers manage risks around technology and data.

Mr Longo said the regulator was better placed to respond to threats and opportunities thanks to its new structure.

“The new structure and our strategic priorities are also helping better guide decisions about how to deploy ASIC’s limited resources,” he said.

The ASIC chair highlighted the regulator’s enforcement track record, noting the commission had commenced 170 new investigations in the last year.

“We filed 33 new civil proceedings in the Federal Court – an increase of 27 per cent in civil proceedings on the previous year,” he said.

“Our investigations have led to 18 criminal convictions and seen a further 23 individuals charged by the Commonwealth Director of Public Prosecution for criminal offences.”