ASIC reviewed the compliance of Australian financial services licensees (AFSLs) against seven compliance risks and found that more than 70 per cent of those reviewed “demonstrated issues” with at least three.
ASIC commissioner Cathie Armour said the report highlighted “some serious compliance failures” within the industry, and warned investors to be mindful of the complex OTC derivatives industry.
“We hope the report will encourage [investors] to be more aware of the risks of these types of products as well as improve their understanding of the standards of practice they should expect from retail OTC derivative providers,” Ms Armour said.
ASIC has formulated more than 150 regulatory outcomes as a result of the surveillance, including: improvements to defective disclosure corrections to the registry and AFSL information; improved supervision of representatives; and suspensions and cancellations of licences.
“We expect industry to take note of our findings and proactively remediate any areas requiring improvement to ensure they have adequate and enduring compliance measures to fulfil their regulatory obligations,” Ms Armour said.
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