ASIC, Regulation

ASIC sets up new enforcement arm following RC

The Australian Securities and Investments Commission (ASIC) will implement all the recommendations made by the banking royal commission in regards to ASIC and has already formed a separate Office of Enforcement (OE) within the regulator.

ASIC released an update on its implementation of the commission’s recommendations, saying many reinforce steps “ASIC has been taking as part of a strategic program of change that commenced in 2018 to strengthen our governance and culture and to realign our enforcement and regulatory priorities”.

“There are 12 recommendations that are directed at ASIC, or where the government’s response requires action now by ASIC, without the need for legislative change. ASIC is committed to fully implementing each of these,” it said in the update.

Four of the recommendations relate to banking, with another four recommendations relating to financial advice and life insurance, and the remainder related to ASIC enforcement work.

Of the four related to financial advice and related products, the regulator said it will work with industry to create codes of conduct that had enforceable provisions, oversee the activities of product issuers in ending grandfathered commissions by the start of 2021, conduct a review of life insurance commission caps and clawback arrangement in 2021 and, pending parliamentary approval, cap commissions in the sale of add-on insurance related to motor vehicle sales.

In the update, it noted the formation of the OE was the result of the regulator adopting a ‘why not litigate?’ enforcement stance in October 2018 after receiving additional funding from government in August 2018.

The regulator stated the OE “will be responsible to the commission for investigation and enforcement of contraventions of the laws that ASIC administers” and would be separate from non-enforcement-related contact with regulated entities.

The formation of the OE would be completed during 2019, according to ASIC, which added its impact would become evident over time, but that as part of its initial efforts around enforcement there has been a 15 per cent increase in the number of ASIC enforcement investigations on foot and a 50 per cent rise in the number of ASIC enforcement investigations of misconduct by large financial institutions since 1 February 2018.

ASIC said there were a further 11 specific referrals also made by the commission in relation to eight financial services entities and it had prioritised work on those referrals, but could not comment on potential or actual investigations.

At the same time, it indicated it was investigating 12 matters that were case studies at the commission and had commenced proceeding in regards to Nulis and MLC, and Dover Financial Advisers and Terry McMaster.

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