This year, I have been fortunate to be part of the Federal Government's ASIC Enforcement Review Taskforce. The mandate of the Taskforce is to carry out an extensive examination of the capability of ASIC's enforcement regime and powers, and make recommendations about how these can be enhanced.
It has been a privilege and a career highlight to work alongside ASIC, the Attorney-General’s Department, Treasury, the Commonwealth Director of Public Prosecutions, as well as some of the brightest minds from industry bodies, consumer groups and academia.
Together, we have made recommendations to the Government (often after public consultation on papers prepared on various topics) on policy and legislation to ensure that in the future ASIC is able to operate in line with global best practice, and to future proof, as much as possible, the suitability of the regulatory tools available to ASIC to perform its functions.
The risk and regulatory landscape in the financial services industry has changed significantly in the last decade. The environment in which financial institutions are currently operating will ensure that the pace and extent of change will continue into the foreseeable future.
The way we do business is rapidly changing. The introduction of digital channels, the continued growth in the use of technology by customers, the growth of FinTech companies and non-traditional financial services providers, and the introduction of robo advisors, will all have an impact on the extent and pace of risk and regulatory change.
Regulations governing the behaviour of financial institutions towards their customers will both expand and be enforced strictly by ASIC and other regulators. Marketing, branding, the nature of products, advice, pricing structures and sales practices are increasingly under the microscope. Greater attention is being paid by regulators, such as ASIC, to matters such as financial crime, as the nexus between financial crime, and organised crime and terrorist activities is better understood.
Public and government tolerance for failures within financial institutions is extremely low, and governments and international regulatory bodies are now demanding 'good institutions', not just 'good practices'.
It is vital that in this environment ASIC has the ability to access the information it requires to examine, pursue and prosecute corporate wrong doing. Everyone operating in the financial services industry needs to ensure that misconduct is fittingly dealt with, to ensure that breaches are not repeated and best practices are embedded, which assists in restoring consumer trust and confidence in the financial system. In this context, it is likely that reporting obligations will increase, ASIC will have a greater ability to access information (for example, through search warrants and the receipt of telephone and other digitally transmitted information), and penalties will be increased.
Growing consumer demands and regulator expectations of financial institutions have shifted caveat emptor (let the buyer beware), to seller beware.