ASIC to launch several investigations following royal commission

ASIC’s enforcement teams are undertaking investigations into 12 matters that were case studies before the royal commission and are assessing another 16 case studies to determine whether investigations should be commenced, the regulator said in response to the royal commission's findings.

"ASIC expects these investigations to result in a number of referrals to the Commonwealth Director of Public Prosecutions for assessment for criminal prosecution," it said.

The regulator revealed that since 1 February 2018 there has been a 15 per cent increase in the number of ASIC enforcement investigations on foot and a 50 per cent increase in the number of ASIC enforcement investigations of misconduct by large financial institutions.

The royal commission identified ASIC’s enforcement culture as the focus of the change needed at ASIC. It questioned the regulator's treatment of misconduct, judging that it often went unpunished or the consequences were not adequate for the seriousness of what had been done.

"Much more often than not, when misconduct was revealed, little happened beyond apology from the entity, a drawn out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable ‘concerns’ about the entity’s conduct," Justice Hayne wrote.

In its response to Justice Hayne's findings, ASIC said that it has already adopted a ‘why not litigate?’ enforcement stance and publicly committed to that posture going forward. Furthermore, it has initiated an Internal Enforcement Review (IER) and is "determined to establish" a separate Office of Enforcement.

"ASIC’s changed enforcement approach is part of a broader change program initiated in 2018. This includes additional commission members and a new leadership structure, a new vision and mission, and changes to ASIC’s governance, structure and decision-making," the regulator said.

It added that it looks forward to working with the Parliament, the government, APRA and other regulators on these reforms that it sees as "crucial to the creation of a fair, strong and efficient financial system for all Australians".