ASIC calls for further funding amid enforcement boost burden

The corporate regulator needs to make a major spend on technology as it looks to expand its enforcement workload, amid a number of high-profile actions.

ASIC chair Joe Longo, right. Picture: Jane Dempster

The corporate regulator has warned it is in “dire need” of a major spend on a “significant technology update” as it looks to expand its enforcement workload, amid a number of high-profile actions.

Appearing before the Parliamentary Joint Committee on Corporations and Financial Services on Tuesday, the Australian Securities & Investments Commission said its latest cash injection in the federal budget would not cover the work needed to boost its efforts.

ASIC chair Joe Longo said ASIC was facing an underinvestment risk, with the regulator’s limited resources pitted against the far larger cash reserves of corporations it sought to regulate.

But Mr Longo, who marks his fourth year at the top of ASIC, said any discussion about expanded resourcing and better regulation had to include the Commonwealth Department of Public Prosecutions, which handled criminal referrals.

“If you expect more of ASIC on the criminal side, then what you’re really saying is you’re expecting more of the CDPP because they’re going to get more work to do,” he said.

Mr Longo said the CDPP was also in need of cash, with criminal matters discovered by ASIC referred to the body. ASIC’s long-serving CEO Warren Day recently joined the CDPP on a six-month secondment, aimed at redesigning the prosecutors’ office program of work and modernising its practice.

The committee heard ASIC’s referrals to the CDPP had collapsed, from 47 in 2018-19 to just nine in 2023-24.

ASIC deputy chair Sarah Court noted although the referrals changed year on year, the overall conviction rates “have actually remained very stable”.

Ms Court noted the higher number of referrals in past years also represented the overhang of action flowing from the banking royal commission.

But Ms Court said they also showed ASIC had been focusing its resources on “significant civil litigation matters”. Ms Court said the regulator needed additional funding to bankroll a major technology upgrade, with ASIC recently appointing a new head of data, digital and technology Joanne Harper.

Ms Court told the committee ASIC was dealing with companies which attempted to swamp the regulator with documents, noting there was “no doubt in my mind” that if ASIC got more funding it would be able to run more cases and with greater efficiency.

“That would enable us to take on more matters and if we can take on more matters, we could recover more civil penalties to return to government more revenue,” she said.

But Ms Court warned she was aware of the perverse incentives of allowing ASIC to bank the penalties it took from companies, noting the agency was aware this could lead the regulator to pursue companies which were better placed to pay.

ASIC has pursued many of Australia’s largest companies through the courts in recent years, with the regulator detailing to the committee, in a closed session, its recent efforts around bank hardship matters and enforcement against large financial institutions.

The regulator recently launched action against Westpac and is understood to be closely assessing several other banks.

ASIC told the committee it was also closely looking at HSBC over its responses to fraudulent transactions on customers, amid a litany of complaints over security breaches.

Ms Court said the regulator was “well aware of issues” around HSBC, noting it had been first alerted to the unauthorised transactions from customer accounts 12-18 months ago. She said ASIC had been engaging with consumer groups and had heard a number of concerns about HSBC’s responses to its customers who had been defrauded.

Ms Court said ASIC was not only concerned about the disparity between banks over their responses to scams and fraud, but also within a bank over the mismatch in responses.

ASIC also told the committee it was closing in on its investigation into the ASX replacement of its clearing and settlement CHESS system.

Ms Court said the regulator continued to investigate the ASX, amid concerns the exchange failed to tell investors its replacement program had gone awry prior to damaging revelations in June last year that the technology program would be dumped.

The ASX revealed on Thursday its new CHESS program would see expenses surge by 15 per cent this year, followed by 6 per cent to 9 per cent in 2025.

Ms Court told the committee ASIC’s investigation was still “very much a live matter from an enforcement perspective”.

“We’re aiming to bring it to a conclusion in the relatively near future,” she said.