ASIC enforcement and regulatory update: July to September 2023

In the third quarter of 2023, the Australian Securities and Investments Commission (ASIC) continued to use its enforcement and regulatory tools to protect consumers and investors from financial harm and uphold the integrity of Australia’s financial markets.

There was a strong focus on greenwashing, insurance sector failures, the protection of vulnerable consumers, and poor design, pricing, and distribution of financial products.

In its latest enforcement and regulatory update, ASIC details key enforcement and regulatory actions taken between July and September 2023, and actions taken to protect consumers and small businesses, protect investors, strengthen market integrity, and foster industry compliance.


Protecting consumers and small businesses

During the quarter, ASIC took targeted enforcement and regulatory action to protect consumers and small businesses from financial harm. They acted against potential misconduct and non-compliance in the banking, credit, insurance, and superannuation sectors. Key actions included:

  • Addressing failure to respond to hardship notices: ASIC filed a civil penalty case against Westpac in September, claiming the bank failed to respond promptly to 229 customers’ hardship notices between 2015 and 2022 due to deficiencies in its online process.
  • Penalty for overcharging customers: In September 2023, the Federal Court fined NAB $2.1 million for engaging in unconscionable conduct from January 2017 to July 2018. NAB continued to charge customers periodic payment fees without contractual entitlement. The bank also paid around $9 million in remediation to affected customers who were incorrectly charged such fees since August 2001.
  • Penalty for misleading customers: In September, the Federal Court imposed a $15 million penalty on ANZ after the bank admitted to misleading customers about the available funds in specific credit card accounts.
  • Addressing superannuation trustee failure: In September, ASIC initiated legal action against AustralianSuper, the largest superannuation fund in Australia, for allegedly neglecting to address the problem of members having multiple accounts. ASIC claims that for nearly a decade, AustralianSuper lacked sufficient policies to identify and merge such accounts, resulting in continued charging of multiple fees and insurance premiums to affected members.
  • Combating misleading pricing promises: In August, ASIC initiated legal proceedings in the Federal Court against IAG subsidiaries IAL and IMA, alleging that loyalty discounts promoting the renewal of certain home insurance policies were misleading. ASIC contends that premiums might have been raised before applying the discounts, creating a deceptive practice.
  • Disrupting scams: ASIC and the Australian Competition and Consumer Commission (ACCC) are jointly spearheading an investment scam fusion cell through the National Anti-Scam Centre. This collaborative effort aims to develop strategies to disrupt investment scams, representing a significant move in safeguarding Australian consumers from fraudulent investment schemes.


Protecting investors

During the quarter, ASIC continued to target and disrupt potential harm to investors by using its regulatory and enforcement toolkit, including court action, infringement notices and interim stop orders. Key actions included:

  • Penalty for crypto product representations: In September, fintech company Bobbob Pty Ltd paid $53,280 to address infringement notices related to misleading representations about a crypto-asset linked investment product. Additionally, ASIC accepted a court enforceable undertaking from both Bobbob and its sole director regarding these representations.
  • Combating unlicensed activity: In August, Melbourne-based cryptocurrency lender Helio Lending Pty Ltd received a non-conviction bond for falsely asserting possession of an Australian credit license that it did not hold. Helio agreed to a recognisance of $15,000 for 12 months, contingent on maintaining good behaviour.
  • Deterring greenwashing: In July, ASIC filed civil penalty proceedings against Vanguard Investments Australia in the Federal Court, accusing the company of making false and misleading statements. The allegations involve misrepresentation of the screening of all securities in the Vanguard Ethically Conscious Global Aggregate Bond Index Fund against specific environmental, social, and governance criteria.
  • Enforcing DDOs to improve product design:
    • In August, ASIC initiated legal proceedings against eToro Aus Capital Limited in the Federal Court for allegedly violating its design and distribution obligations (DDOs). ASIC contends that eToro’s target market for its contract for difference (CFD) product was excessively broad, considering the high-risk nature of CFDs.
    • In September, ASIC commenced civil penalty proceedings in the Federal Court against Bit Trade Pty Ltd, alleging Bit Trade failed to comply with its DDOs for the margin trading product it offered to Australian customers on the Kraken cryptocurrency exchange.


Strengthening market integrity

During the quarter, ASIC took targeted action to ensure regulated entities comply with the law and uphold the integrity of Australia’s financial markets.

ASIC’s actions resulted in the Markets Disciplinary Panel (MDP) handing down record penalties. Key actions included:

  • Acting against markets compliance failures: To comply with an infringement notice issued by the MDP, Openmarkets Australia Limited paid a record penalty of $4.5 million and entered into an enforceable undertaking after ASIC identified repeated suspicious trading by one of its clients.
  • Addressing negligent and reckless conduct: In September, Interactive Brokers Australia Pty Ltd paid a penalty of $832,500 in response to an infringement notice from the MDP. The MDP determined that Interactive Brokers was negligent in not identifying suspicious trading by a client and acted recklessly by allowing such trading to persist after ASIC raised concerns.
  • Addressing financial reporting failures: Between 1 January 2023 and 30 June 2023, ASIC prosecuted 36 companies for failing to lodge financial reports, hold annual general meetings and maintain the required number of directors and resident directors. ASIC’s prosecutions resulted in more than $700,000 in penalties.


Fostering industry compliance

During the quarter, ASIC’s industry compliance, supervision and guidance work included:

  • Releasing findings and recommendations from its reviews of TMDs, claims handling practices, and AFS and credit licensees’ remediation procedures
  • Implementing with APRA the Financial Accountability Regime (FAR) by the financial services industry.


Key takeaways

In the third quarter of 2023, ASIC actively enforced regulations, safeguarding consumers and strengthening market integrity. Actions included penalties for banking, credit, and insurance sector misconduct, combating scams, and disrupting potential harm to investors. ASIC also enforced design and distribution obligations, tackled greenwashing, and promoted industry compliance. The quarter saw record penalties, reflecting a comprehensive approach to maintaining Australia’s financial market integrity.