The Australian Securities & Investments Commission (ASIC) regulates companies, financial markets and financial services, and enforces laws relating to the Australian financial system.
In its 2021-22 Annual Report, ASIC outlines its key enforcement and regulatory outcomes for the period, including $113 million in penalties imposed on Westpac for widespread compliance failures.
Enforcement outcomes
ASIC prioritises cases of high deterrence value and those involving egregious harm or misconduct, particularly towards vulnerable consumers. In the reporting period, ASIC’s focus areas included:
- Serious misconduct that harms confidence in markets, business and the economy or exacerbates consumer hardship.
- Poor product design and governance, mis‑selling, and failure to comply with conflict of interest requirements and disclosure obligations.
- Perpetrators of egregious digital and other financial sector scams.
- Failure to adequately manage cyber risks that harm consumers.
- Failure to implement new standards set by law reform initiatives.
Criminal convictions
ASIC commenced 107 investigations in 2021–22. This resulted in 33 people being convicted of criminal offences, with 13 of those people receiving custodial sentences.
89 percent of criminal litigation was completed successfully. The total dollar value of fines was $2.1m and the total dollar value of pecuniary penalties was $102,175.
Case example
In August 2021, following an ASIC investigation, two former auditors of Halifax Investment Services Pty Ltd (Halifax) were convicted and ordered to pay fines of $10,000 and $40,000 respectively for failing to conduct audits in accordance with auditing standards.
These are the first auditors in Australia to face criminal prosecution for auditor misconduct.
The breaches included failure to:
- Understand Halifax’s business.
- Design appropriate tests to identify material misstatements in the accounts.
- Take responsibility for the overall conduct of the audits.
Civil actions
ASIC completed 61 civil actions, covering issues such as:
- Providing unlicensed financial advice.
- Fees for no service breaches.
- Overcharged interest.
- Misleading and deceptive conduct.
- Unconscionable conduct.
- Continuous disclosure contraventions.
- False and misleading advertising.
- Failure to comply with the best interests duty.
- Failure to report breaches to ASIC in the time required by law.
Of these actions, 100 percent were successful. The total value of penalties for these civil court cases was $229.9 million.
Case example
ASIC launched an unprecedented six civil penalty proceedings against Westpac on 30 November 2021, for widespread compliance failures across multiple Westpac businesses which spanned banking, superannuation, wealth management and insurance. The failures occurred over the course of 13 years and affected more than 70,000 customers.
For example, over a 10‑year period, Westpac charged over $10 million in advice fees to over 11,000 deceased customers for financial advice services that were not provided.
Westpac admitted to the allegations in all six proceedings and will remediate approximately $80 million to customers.
In April 2022, the Federal Court ordered that Westpac pay penalties amounting to $113 million for these widespread compliance failures.
Administrative actions
ASIC completed 180 administrative actions including:
- 59 actions taken against auditors.
- Three actions taken against liquidators.
- 58 people disqualified or removed from directing companies.
- 39 people/companies removed, restricted or banned from providing financial services.
- 18 people/companies removed, restricted or banned from providing credit services.
- Three licence conditions imposed on ASX.
Court enforceable undertakings
Court enforceable undertakings are a flexible tool that ASIC can accept to achieve improved compliance with the law and encourage a culture of compliance.
ASIC accepted one court enforceable undertaking in 2021–22.
Infringement notices
In 2021–22, ASIC issued two infringement notices against Maritime Super Pty Ltd and received a total of $26,640 in payments pursuant to those infringement notices.
The Markets Disciplinary Panel issued one infringement notice to a market participant, specifying a total of $110,250 in penalties for alleged breaches of the market integrity rules.
Key takeaways
ASIC is committed to supporting market integrity and tackling the areas of greatest harm to consumers and investors. This commitment is demonstrated by ASIC’s significant actions against misconduct, which in 2021-22 included 33 criminal convictions, 61 civil actions, and record penalties.
