If you have been investigated by the Australian Securities and Investments Commission (ASIC), you may have concerns that ASIC will take regulatory action against you. Asking ASIC to give a no-action letter may provide some comfort and assurance that ASIC does not intend to take regulatory action in relation to the conduct.
ASIC provides a guide detailing the key considerations related to no-action letters.
What is a no-action letter?
A no-action letter is a letter in which ASIC states to a particular person that it does not intend to take regulatory action related to particular conduct.
While a no-action letter is an expression of ASIC’s regulatory intent at the time the letter is given, it is not a guarantee that ASIC will not take action in the future. For example, ASIC may subsequently decide to take action if there was an incomplete disclosure at the time the application for the no-action letter was made. At any time, ASIC may withdraw or revise the letter.
Why does ASIC give no-action letters?
ASIC will only give a no-action letter if it serves a clear regulatory purpose, such as business facilitation. As per s1(2) of the Australian Securities and Investments Commission Act 2001 (Cth), ASIC has a responsibility to promote commercial certainty, reduce business costs, and enhance the efficiency and development of the economy.
Third party actions are not precluded
An ASIC no-action letter does not preclude third parties (including the Director of Public Prosecutions) from taking legal action in relation to the conduct.
Even if ASIC has issued a no-action letter, a court may still find that the conduct contravenes the relevant legislation and could impose penalties, including criminal penalties for white collar crimes.
How to get a no-action letter
A no-action letter will only be given when ASIC:
- Has received a formal application for a no-action letter,
- Believes that it would serve a clear regulatory purpose to give a no-action letter, and
- Believes that it would not advance the policy of the legislation to take regulatory action.
An application for a no-action letter must be submitted through the ASIC Regulatory Portal. ASIC’s guide provides details about what information an application should include, such as matters of policy and law supporting why it is not in the public interest for ASIC to take action.
Table 1 in the ASIC guide outlines factors influencing the likelihood that a no-action letter will be given including the nature of the conduct, your present and past actions, and the impact on third parties.
What is a class no-action position?
In some cases, ASIC may give a no-action position that relates to a class of people or conduct. This may be initiated by ASIC, or in response to a broader no-action request, for example from an industry or professional association seeking a no-action position for its members. If ASIC decides to give a class no-action position, it will do so in the form of a regulatory guide.
As with a non-action letter, giving a class no-action position does not restrict ASIC or third parties from taking action.
ASIC may, depending on the circumstances, give a letter stating that it does not intend to take regulatory action against an individual or class of people for specific conduct. However, even if such a letter is given, this does not preclude actions from third parties such as the Director of Public Prosecutions, and ASIC may change its position at any time.