What was and what will be: Let's talk some more about compliance


With 2018 well under way, ASIC have released their performance assessment for the back half of last year.

We previously wrote about ASIC's 2018 enforcement activity, and we were wondering how your new-year plans are progressing. With the publication of ASIC's second-half report, we thought it would be a great opportunity to take stock of what else occurred last year.

Depending on your perspective, you may find it alarming, depressing or thrilling; in any event, it will to help you assess whether you are, or are likely to, meet their expectations.  

Report 586 focused on July to December 2017. In summary, they appears to have had a very busy and profitable six-month period recording 12 Enforceable Undertakings, 34 Infringement Notices and $1,700,000 in infringement penalties, $21,700,000 in civil penalties and $94,400,000 obtained in compensation and remediation costs. 

ASIC report 586: “ASIC enforcement outcomes: July to December 2017

ASIC report 586: “ASIC enforcement outcomes: July to December 2017

Restoring trust and confidence

This report highlights our ongoing commitment to ensuring that Australians can have trust and confidence in the financial system. Where there are practices in our markets and financial services industry that could create harm, ASIC will take enforcement action to protect investors and consumers.
— Cathie Armour, ASIC Commissioner

ASIC will continue their focus on ‘gatekeepers’ to ensure that they are conducting themselves in a manner consistent with the law, professional standards and community expectations. In the Shadow of the Royal Commission, ASIC have reiterated that they will continue to take action against any who do not meet these standards.

Recent penalties, administrative orders and other regulatory actions provide persuasive reminders that ASIC is active, and we can only hope that this will eventually restore trust and confidence in the advice profession before the reputation of the profession is damaged beyond repair.

In addition to the work already being carried out by ASIC, they have also welcomed the establishment of the Australian Financial Complaints Authority (AFCA). The new dispute resolution service which aims to start accepting complaints by 1 November 2018.

The AFCA will operate as a single scheme for all financial services and superannuation complaints and will provide more consumers and small businesses with access to a free and independent forum with higher monetary limits and compensation caps.

We certainly hope this service achieves what it is designed to do.

2018 Priorities

ASIC have declared that, in 2018, that intend to focus their attention on:

  • Responsible lending practices in the consumer credit industry;
  • Financial advisers’ compliance with the best interests duty and their obligation to provide appropriate advice to clients;
  • Australian financial services (AFS) licensees’ failure to deliver ongoing advice services to financial advice customers who are paying fees to receive those services—for more information, see Financial advice: Fees for no service (Report 499);
  • Conduct in the credit repair industry that results in consumers being deceived or misled, either about the effectiveness of the services that they pay for, or about the credit repair firm’s ability to improve their credit history; and
  • Instances where AFS licensees claim to provide general advice to retail clients during the sale of financial products (and therefore do not need to comply with the best interests duty and related obligations), but are actually providing personal advice.

Maybe 2018 will be the year that the ASIC highlight financial services for all the right reasons. Perhaps in 2018, the need for ASIC's intervention will  significantly decline.

This may appear to be a hopelessly optimistic view of the future, but we can all work to make it more likely. It simply requires us all to better understand, or more effectively comply with, our legal and professional obligations.

The first step is understanding what those are. Take a look here. It may help you get started.