The corporate watchdog released its four-year corporate plan yesterday, outlining its strategies for enforcement, more intensive supervision, greater use of new regulatory tools and a new internal governance framework.
In the report, ASIC noted aiming to not only deter misconduct, but also to encourage compliance for the benefit of consumer and investors.
In supervisory regulation, the regulator is planning to add more large financial service organisations over the next four years to its close and continuous monitoring (CCM) scheme, its onsite and proactive supervision program launched in October.
New measures are being brought into place to regulate investment managers, with ASIC implementing best interest duty for responsible entities through industry liaison, education and surveillance.
The corporate watchdog will also be pushing for competition in funds management, assessing the level of rivalry and determining how to improve it.
The report also delves into ASIC’s expanded role as the primary conduct regulator for the superannuation sector.
Currently it is engaging with Treasury and APRA on developing legislative reforms for super.
For now, ASIC said it would be improving its communication to super trustees and their advisers, aiming to improve industry behaviour.
ASIC also noted it will be monitoring the breakaway of large banks from wealth management and the potential flow-ons for consumers.
ASIC to scale up in next four years
A number of new projects have been highlighted as actions over the next four years lined up for ASIC, including developing “transparency tools” in the regulatory context to drive improved industry behaviour and more effective industry competition.
ASIC’s plan outlines seven priorities, which include high-deterrence enforcement action, prioritising recommendations from the royal commission, delivering as a superannuation conduct regulator, improving governance and accountability, protecting vulnerable consumers and addressing poor advice outcomes.
The regulator has received $404 million of additional funding over the next four years, chiefly to advance recommendations relating to the Hayne commission.
Among other measures such as launching its regulation of super, ASIC will be using the funding to boost its staff count over the period, from its current 1,635 full-time employees.
To this end, as noted by chair James Shipton, ASIC will be building up its capability in behavioural sciences, data and technology and scaling up.
The body is continuing to follow its new enforcement strategy, “Why not litigate?” with its Office of Enforcement, launched earlier this year, overseeing its decision making, accelerating court-based outcomes and using tougher powers and penalties.
In June, the number of enforcement matters in progress was 20 per cent higher than the same time the previous year.
Fairness was also pointed to in the report as a new characteristic ASIC is chasing, with the regulator to publish its position on how the financial services should consider fairness, and to develop fairness principles to form the foundations of the body’s supervision, enforcement and regulatory policy.
Mr Shipton has previously called for financial institutions to “embrace and embed fairness into everything they do.”
Corporate culture and governance will also be a key area of focus for the regulator, with its Corporate Governance Taskforce reviewing the practices of large finance organisations in the close and continuous monitoring program, as well as ASX 100 companies from other sectors.
The task force will publish two reports in the second half of 2019.
Sarah Simpkins
Sarah Simpkins is a journalist at Momentum Media, reporting primarily on banking, financial services and wealth.
Prior to joining the team in 2018, Sarah worked in trade media and produced stories for a current affairs program on community radio.
You can contact her on [email protected].
