ASIC’s 2023 enforcement priorities show a continued focus on greenwashing, predatory lending, and interrupting investment scams. The release of the enforcement priorities highlights the need to protect consumers from financial harm and enhance the integrity of Australia’s financial markets. It also indicates where ASIC will focus its human and financial resources over the next year.
For 2023, ASIC’s enforcement priorities are:
- Enforcement action targeting poor design, pricing and distribution of financial products
- Misleading conduct concerning sustainable finance, including greenwashing
- Misconduct involving high-risk products, including crypto assets
- Combating and disrupting investment scams, with a focus on crypto assets and cons and other high-risk products
- Protecting financially vulnerable consumers, especially concerning predatory lending or high-cost credit
- Misleading and deceptive conduct relating to investment products
- Misconduct in the superannuation sector
- Failures by providers of general insurance, particularly concerning delivering on price promises
- Misconduct that involves misinformation through social media Governance and director’s duties failures, with a focus on property schemes
- Manipulation in energy and commodities derivatives markets
- Unfair contract terms
ASIC’s enduring priorities
ASIC retains five enduring priorities which underpin and guide the focus areas from year to year. The five enduring priorities are:
- Misconduct damaging to market integrity, including insider trading, continuous disclosure failures and market manipulation
- Misconduct impacting First Nations people
- Misconduct involves a high risk of significant consumer harm, mainly targeting financially vulnerable consumers.
- Systemic compliance failures by large financial institutions resulting in widespread consumer harm
- New or emerging conduct risks within the financial system
What does this mean for licensees?
Licensees should take note of ASIC’s 2023 enforcement priorities, particularly those that affect the licensees’ operations. One key area where we have already seen ASIC take action is compliance with the Design and Distribution (DDO) regime. ASIC has acted to place stop orders on several financial firms in response to deficiencies in their Target Market Determinations (TMDs). Licensees that are required to comply with the DDO regime must undertake the following:
- Appropriate product governance arrangements
- Update product governance arrangements on an ongoing basis and in response to any significant dealings or complaints
- Proper consideration of the target market and the attributes of the product
- Review and implement any required amendments to TMDs
- Appropriate distribution of products, including liaising closely with distributors to ensure significant dealings and complaints receive an appropriate response
Misleading and deceptive conduct is also a key enforcement focus for ASIC. Whilst ASIC has specifically called credit, sustainable finance and superannuation products essential areas of focus, all licensees can take action to ensure they do not provide information or engage in misleading or deceptive conduct. Small steps such as:
- Reviewing marketing material before release against ASIC’s good practice guidance in Regulatory Guide 234;
- Training representatives to ensure they understand the products and services the licensee is authorised to provide;
- Ensuring the risks and benefits of a product are appropriately and adequately disclosed to consumers;
- Ensuring you substantiate claims of sustainability or performance.
The intention of the content of this article is to provide a general guide to the subject matter. You should seek specialist advice about your specific circumstances.
Vogue Advisory Group – how we can help you understand 2023 enforcement priorities
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