ASIC’s 2023 regulatory timetable, updated enforcement priorities and latest enforcement and regulatory report

ASIC has said it will continue to prioritize and take action to address “high deterrent value” cases involving “enormous harm or wrongdoing.”

ASIC has released an update of its enforcement priorities and regulatory timeline for 2023 to coincide with the release of its latest Enforcement and Regulatory Report (Report 757). The update provides regulated companies with further clarity and insights into the approach and focus areas of corporate governance for 2023.

“Enhanced” enforcement priorities for 2023

ASIC’s enforcement priorities for 2023 will have a “strong focus” on:

• sustainable financial practices and disclosure of climate risks (greenwashing);
• financial fraud;
• cyber and operational resilience; And
• Investor damages related to crypto assets.

This update signals an expansion of ASIC’s enforcement priorities for 2023, which were announced on November 3, 2022. These priorities included poor design, pricing and distribution of financial products; governance and derelictions of duty by directors; misconduct in the pension and insurance sectors; Misconduct related to Crypto Assets; investment fraud; and market manipulation.

“Extended” areas for ASIC enforcement

ASIC’s release is consistent with its focus on the two emerging areas of greenwashing and DDO obligations:

• In October 2022, ASIC initiated its first greenwashing enforcement action. Between July and December 2022, ASIC issued infringement notices to three companies for making misleading sustainability-related claims.
• An emerging area of ​​focus for ASIC appears to be design and development commitments. ASIC issued 22 DDO “stop orders” to companies during the period to prevent consumers and investors from being attacked by products that are inappropriate for their goals, financial situation and needs. In December 2022, ASIC initiated civil criminal proceedings alleging American Express DDO violations regarding two co-branded David Jones American Express cards.

Notwithstanding this new focus, ASIC has remained an active litigant in other sectors and in December 2022 initiated a major enforcement against former directors of Star Entertainment Group Limited for alleged breaches of the duties of directors and officers involving money laundering risks.

Enforcement Activities and Penalties

During the reporting period, courts awarded a total of US$76.3 million in civil penalties, bringing the total civil penalties awarded in calendar year 2022 to US$222.1 million. Regarding ASIC’s enforcement activities in the last quarter of 2023, ASIC Vice Chair Sarah Court commented that in the last quarter of 2022, ASIC initiated significant enforcement and regulatory actions “to address wrongdoing, threats to market integrity and consumer harm” across financial services sectors. Retail and crypto-asset sectors, including in relation to corporate governance and directors’ duties, product design and distribution, and misleading statements about sustainable financial practices.

These included a $25 million penalty imposed on ANZ by federal court in October 2022 for failing to provide agreed benefits to customers with balanced transaction accounts or as part of a “breakfree” package.

Timetable for regulatory developments

For the first time, ASIC has published an interactive Regulatory Developments Timeline, which lists ASIC’s proposed timeframes for regulatory work, including the release of draft or final guidance or the expected production of a legal instrument. ASIC signaled its intention to publish the roadmap every six months and not change it between updates.

The schedule lists 18 initiatives planned between January and March 2023, five initiatives between April and June 2023 and 4 from July 2023 and beyond. It covers the expected actions by ASIC for relevant initiatives, including consultations, updates to regulatory guides, issuance of factsheets or user manuals, or implementation of regulations made.

I’m looking forward to

In addition to its various regulatory activities, ASIC has stated that it will continue to prioritize and take action to address “high deterrent value” cases involving “enormous harm or wrongdoing” to address consumer and investor harm; however, said it is “focused” on helping industry comply with its legal obligations and intends to provide “simple, effective and accessible guidance”.