The Australian Securities and Investments Commission (ASIC) has reaffirmed the importance it will place on consumer protection in 2023 given the challenges investment markets are currently facing.
During his opening speech at the ASIC Annual Forum 2022 in Sydney today, ASIC chair Joe Longo cited market volatility, uncertainty, product complexity and an ageing population as factors for the corporate regulator to remain vigilant about in this area.
“[Those issues make] it more important than ever that products are appropriately designed and that their marketing is targeted at the consumers they are appropriate for. These are the fundamental requirements of DDO (design and distribution obligations) and ASIC is actively monitoring and enforcing these obligations,” Longo said.
“Too often, issuers are seeking to market high-risk and niche investment products, including in some cases crypto-based products, to a very wide range of consumers. We’re seeing issuers promoting high-risk products as appropriate investments that will make up a significant portion of an individual consumer’s investment portfolio.
“This will not be tolerated and action will be taken.”
He pointed out this focus will be witnessed through the corporate watchdog’s enforcement activities over the coming year.
“We are focused on conduct that targets vulnerable consumers, including First Nations people, and serious misconduct that is damaging to market integrity,” he noted.
“We are looking at systemic compliance failures by large institutions that result in widespread consumer harm, and on emerging conduct risks.
“Through our enforcement work, we hold to account those who contravene the law.”
However, he acknowledged the need to adopt a balanced approach to ASIC’s enforcement activities.
“Clearly, it’s necessary to take decisive action against those who cause harm to consumers and investors,” he said.
“But there is also a need to focus on deterrence, education and prevention to reduce harms arising in the first place.”
Further, he revealed a conscious effort has been made by the regulator to avoid complacency as it has been recognised it leads to failure.
