The Australian Securities & Investments Commission (ASIC) has announced its Enforcement Priorities for 2023. This is the first time ASIC has identified particular areas of enforcement focus for a specific year, in addition to its enduring priorities.
These priorities communicate ASIC’s intent to industry and its stakeholders, and give a clear indication of where ASIC will direct its resources and expertise.
ASIC’s 2023 enforcement priorities
Throughout 2023 ASIC will prioritise:
- Enforcement action targeting poor design, pricing and distribution of financial products, including in relation to insurance, superannuation and other investment products and credit.
- Misleading conduct in relation to sustainable finance including greenwashing. ASIC is aware of the rise of sustainable finance, with $128 billion net flows into exchange-traded fund (ETFs) with an environmental, social and governance (ESG) focus and a 157 percent increase in advisers who claim to provide ESG advice since 2016. ASIC will closely monitor for misleading conduct and take enforcement action where necessary.
- Misconduct involving high risk products including crypto assets. This priority comes in response to ASIC receiving over 2,200 reports of misconduct involving crypto-assets, including crypto scams, in the two years to June 2022.
- Combatting and disrupting investment scams, including working with other regulators, industry and social media platforms to reduce consumer harm.
- Protecting financially vulnerable consumers impacted by predatory lending practices or high-cost credit including conduct by unlicensed or “fringe” entities. The focus on predatory lending practices comes after ASIC research showed that more than 40 percent of Australians hold two or more credit products, and that further demand for credit cards, personal loans and short-term credit arrangements is likely to increase.
- Misleading and deceptive conduct relating to investment products which obscures the risk, performance or nature of financial products.
- Misconduct in the superannuation sector including misleading conduct and poor governance. ASIC states that it will take action where it sees instances of misleading conduct and poor governance.
- Failures by providers of general insurance to deliver on pricing promises to consumers.
- Misconduct that involves misinformation through social media about investment products, including finfluencer conduct.
- Governance and director’s duties failures including those related to property schemes that expose investors to significant loss. Throughout 2022, ASIC has seen an increase in the collapse of property investment schemes. Working with liquidators, ASIC has detected potential breaches of directors’ duties and director misconduct. ASIC will be prioritising enforcement action relating to how these property schemes have been managed, and will seek to hold individuals to account for their involvement.
- Manipulation in energy and commodities derivatives markets.
- Unfair contract terms including in insurance products.
Enduring priorities
While ASIC’s specific areas to target will change from year to year, in keeping with shifting economic factors and the volatile risk environment, five enduring priorities will remain:
- Misconduct damaging to market integrity including insider trading, continuous disclosure failures and market manipulation.
- Misconduct impacting First Nations people.
- Misconduct involving a high risk of significant consumer harm, particularly conduct targeting financially vulnerable consumers.
- Systemic compliance failures by large financial institutions resulting in widespread consumer harm.
- New or emerging conduct risks within the financial system.
Key takeaways
In addition to its enduring priorities, ASIC has for the first time announced particular areas of enforcement focus for a specific year. Priority areas for 2023 have been identified based on recently observed trends and key issues such as a rise in misconduct involving crypto-assets, investment scams, and predatory lending practices.
