ASIC unveils strategic enforcement priorities for FY25
A wide range of strategic priorities are set to fall under the corporate regulator’s enforcement spotlight in the next 12 months.
ASIC has revealed its corporate plan for 2024–25 and beyond under the five following strategic priorities:
- Improve consumer outcomes.
- Address financial system climate change risk.
- Better retirement outcomes and member services.
- Advance digital and data resilience and safety.
- Drive consistency and transparency across markets and products.
It has a total funding of $592 million available for 2024–25, a rise of 10 per cent compared to the previous year.
ASIC estimated it will recover $408 million in fees and levies over the next 12 months, representing 69.9 per cent of total appropriations received.
“Our latest corporate plan and strategic priorities represent the next step of ASIC’s transformation journey to being a modern, confident and ambitious regulator,” commented ASIC chair Joe Longo.
The corporate regulator reaffirmed its support for two major systems changing the financial advice landscape: the Compensation Scheme of Last Resort’s (CSLR) implementation and the Delivering Better Financial Outcomes (DBFO) law reform.
“We will support Treasury as they progress the DBFO law reform package, the Australian government’s response to the Quality of Advice Review. We will continue to provide input into the reforms, and help implement any changes through guidance, legislative instruments and other relevant ASIC documents,” it stated.
In regards to the CSLR, ASIC confirmed its oversight of the scheme and its power to cancel Australian financial services licensees (AFSLs) where the CSLR operator has paid an amount of compensation in relation to a determination from the Australian Financial Complaints Authority (AFCA) that was not paid by the licensee.
Additionally, advice licensees’ use of artificial intelligence (AI) will be monitored by ASIC as it looks to crack down on risk management systems.
“We will continue to monitor how retail financial services and credit entities use AI and advanced data analytics. We will also assess their risk management and governance processes. We will contribute to the Australian government’s development of AI-specific regulation.”
The regulator will also review advisers’ use of offshore outsourcing arrangements in a bid to further safeguard client data.
Outsourcing has become a growing priority for advisers to streamline operations. For example, Australian firm Vital Business Partners (VBP) has operations in the Philippines and offers outsourced paraplanning services and financial planning administration.
“We will review how investment managers and financial advisers manage the risks of using offshore service providers. In particular, we will look at how they manage risks related to technology, data sharing and privacy. We will also publish resources that will help licensees improve the security of client data when sending it offshore,” it described.
AFSLs will need to ensure their internal dispute resolution (IDR) arrangements are up to scratch as ASIC looks to monitor the adequacy of these systems. The body will publish observations from its IDR surveillance later this year and will release firm-level IDR data in 2025.
“This surveillance will check whether entities have fair and efficient dispute resolution processes in place, and identify areas where licensees need to improve. Publishing complaints data is a key part of the IDR reporting requirements.”
ASIC’s strategic priorities follow after Senator Andrew Bragg released the final inquiry report last month assessing the effectiveness of the regulator’s investigations and enforcements.
Bragg said: “Over the last 20 months, the committee has uncovered the dire state of ASIC – an organisation without transparency, few prosecutions and a litany of cultural, structural and governance issues. It is clear that ASIC has failed.”
In particular, the report found that 93 per cent of reportable situation reports made by AFSLs were assessed as requiring no action in 2022–23, representing more than 26,000 reports.
AUTHOR
Jasmine Siljic
Recommended for you
Having sold Madison to Infocus earlier this year, Clime has now set up a new financial advice licensee with eight advisers.
With licensees such as Insignia looking to AI for advice efficiencies, they are being urged to write clear AI policies as soon as possible to prevent a “Wild West” of providers being used by their practices.
Iress has revealed the number of clients per adviser that top advice firms serve, as well as how many client meetings they conduct each week.
Morningstar has made two business development appointments to drive the growth strategy of its financial advice software, AdviserLogic.
