“NOBODY expects the Spanish Inquisition! Our chief weapon is surprise…surprise and fear…fear and surprise….
Our two weapons are fear and surprise…and ruthless efficiency….
Our *three* weapons are fear, surprise, and ruthless efficiency…and an almost fanatical devotion to the Pope….
Our *four*…no… *Amongst* our weapons…. Amongst our weaponry…are such elements as fear, surprise…. I’ll come in again.”
— Monty Python Scripts ‘The Spanish Inquisition’
Predictability and gentle persuasion
Working in this industry, it is hard not to stay immune to the numerous actions on foot with regards to the regulator and licensees.
We thought we would take an opportunity to take you through ASICs information gathering powers.
ASIC’s powers to issue notices are set out in the Australian Securities and Investments Commissions Act (ASIC Act); the National Consumer Credit Protection Act (NCCP Act); the Superannuation Industry (Supervision) Act (SIS Act) and the Insurance Contracts Act 1984.
Recently, to minimise confusion, and promote informed engagement, ASIC helpfully released guidelines on document production. They’re a compelling read even for those not currently holding a ticking s33 Notice with an ambitious scope and a looming deadline.
read asic’s guidelines on production
If you’re on the receiving end of these powers, you may have received a notice to produce records, you may have been surveyed, investigated or requested to attend an examination. In addition, you may have had your premises searched under a search warrant.
So, your information may be gathered, inspected, disclosed, searched or you may be required to attend an examination or compelled to assist with an investigation.
Let’s look at each one in turn:
Production of documents
ASIC will issue a notice in writing which describes the documents they are seeking and time and place for the production of those documents. The notice may request a production of electronic data and files. If you need more information regarding document production, you may find Information Sheet 242 ASIC’s document production guidelines handy.
read asic’s guidelines on production
In 2018-2019 ASIC under the NCCP and ASIC Acts processed 2,582 notices to produce records.
Inspection of documents
In this instance, ASIC is not required to issue a written notice. Instead they can make this request in writing or orally, and the inspection usually takes place on the premises, where the documents are located. ASIC is not entitled to take possession of those documents or to make copies.
Disclosure of information
This power is most commonly used when ASIC are conducting a surveillance and making preliminary inquiries before the commencement of a formal investigation or monitoring compliance with an enforceable undertaking.
According to their Annual Report, in 2018-2019 ASIC facilitated 874 requests for the provision of information.
‘A friendly chat’: attending an examination
Where ASIC suspects or believes that you can provide information that is relevant to a formal investigation, they are either conducting or intending to conduct, they can require you to attend an examination.
For ASIC to use this power, they must issue you with a notice in writing, where the notice must state the general nature of the matter. ASIC does not have to inform you of the nature of the questions to be asked.
In this instance, the examination will take place in private, and you may be represented by a lawyer. You will be able to request a record of the examination and you have a right to refuse to answer questions on the basis that the answer would disclose information that is covered by a valid claim of legal professional privilege.
If you find yourself attending an examination, it is confidential, and you will be forbidden from discussing the content of the examination with anyone (other than your lawyer) for a period of time.
In 2018-2019 ASIC, under the ASIC and NCCP Acts facilitated 611 examinations.
‘A small favour’: Being compelled to assist
ASIC may compel you to give reasonable assistance in connection with an investigation or prosecution.
This may include, for example, requiring you to sign a power of attorney, providing passwords for accessing computer files or providing a key to a locked safe.
In 2018-2019 ASIC, under the ASIC, NCCP and Corporations Acts facilitated 176 instances of reasonable assistance.
‘A little sticky-beak”‘: Search warrants
A search warrant is sought in a formal investigation and involves the searching of premises for books and records. A magistrate or Justice of the Peace issuing the warrant must consider the evidence relating to the commission of the alleged offence. In addition, a warrant can obtain stored telecommunications data from service providers.
Although not frequently used by ASIC, they may need to apply for, and execute a search warrant in order to obtain documents that may not be available through use of other information gathering powers.
In 2018-2019 ASIC, under the Crimes Act executed 66 search warrants.
Amongst our weaponry …
Information gathering powers are used in two broad areas of regulatory activity: surveillances and investigations of suspected breaches of the law.
A surveillance refers to activities that involve gathering and analysing information on a particular entity or entities to test and ensure compliance with the law. They can be either reactive, i.e. in response to a complaint or industry intelligence, or proactive, to examine the industry environment, or test a concern, issue or practice.
In a surveillance ASIC may inspect books and records or compel you to produce documents or disclosure information.
Investigations are conducted by ASIC’s enforcement team, who conduct inquiries, formal investigations and enforcement actions in response to misconduct. ASIC uses its compulsory information gathering powers to collect documents and information during formal investigations. In addition, this power may be used to conduct compulsory examinations of people who may have information that can assist in their investigation.
You may also provide books voluntarily.
If you are asked to provide documents or information, it does not necessarily mean you are suspect, have breached the law or have committed an offence.
You are required to produce original documents in your possession although in some cases copies may be requested. You will need to produce the documents even though they may incriminate you or make you liable to a penalty.
You have a right to refuse disclosure of the documents if they are covered by a valid claim of legal professional privilege. If you claim legal professional privilege, you will need to be able to explain why privilege will apply to the information.
A failure to comply with a notice may see serious consequences. If you do not have a good reason for not complying with a notice, ASIC can certify to a court that a notice has not been complied with. The Court in its discretion can inquire into the case and order compliance. In addition, the court can impose a penalty.