I am pleased to appear before the Committee once more today. I am joined by Deputy Chairs Sarah Court and Karen Chester and Commissioner Kate O’Rourke, Chief Executive Officer Warren Day and our General Counsel Chris Savundra. Also present today are Executive Director of Regulation and Supervision, Greg Yanco; Executive Director of Markets, Calissa Aldridge, Senior Executive Leader for Market Infrastructure, Ben Cohn-Urbach; Senior Executive Leader Financial Advisers and Investment Managers, Leah Sciacca; and Senior Executive Leader Superannuation and Life Insurance Jane Eccleston.
ASIC update on international work
I wanted to briefly mention ASIC’s international work as I understand there was some interest in my international responsibilities at Senate Estimates last week.
ASIC has an important role in international cooperation relating to supervisory and enforcement work and information sharing to inform our action against misconduct and that of our international counterparts. ASIC participates in various bilateral and multilateral arrangements to enable it to obtain public and non-public information from foreign regulators and law enforcement agencies. This assists our regulatory functions which includes investigations, licensing, surveillance and research matters.
Last week I attended a meeting of the Board of the International Organization of Securities Commissions (IOSCO) in Madrid. This meeting is held in person twice a year, and is attended by the heads of securities regulators from around the globe. This is in addition to a number of IOSCO Board meetings which take place virtually, which are often late at night Australian time. The meeting was an opportunity to discuss common challenges faced by the world’s regulators, such as the implementation of International Sustainability Standards and sharing experiences in dealing with greenwashing. ASIC’s participation in the IOSCO Board is critical to ensure Australia is part of a globally aligned approach to emerging risks and challenges - for example in relation to scams, and emerging technical developments such as artificial intelligence. Scams in particular are challenging to address with solely domestic solutions, and there are efficiencies with working collaboratively with other regulators to address these matters.
ASIC makes a considerable contribution to a number of working groups and committees within IOSCO across a range of topics. Calissa Aldridge, who is appearing today, is Vice-Chair of the IOSCO Committee on Regulation of Market Intermediaries and led work on operational resilience and cybersecurity. Our senior executives have worked extensively with IOSCO’s Sustainable Finance Task Force (STF). That work supported IOSCO’s recent endorsement of the first two standards on disclosure issued by the International Sustainability Standards Board. The Task Force is now progressing other work including assurance and combatting greenwashing. ASIC also has membership on IOSCO’s Committee on Emerging Risks and led important work on risks in private finance. An ASIC senior executive also initiated and co-led the development of a significant report by IOSCO’s Retail Market Conduct Task Force, which is now in a further stage of work to address retail misconduct and scams.
I’m happy to answer the Committee’s questions relating what we can learn from international experiences in these areas.
Release of ASIC Annual Report and recent enforcement action
Deputy Commissioner Sarah Court provided an overview of our recent Annual Report at Senate Estimates last week, which shows our enforcement record continues to be strong. I won’t go over this again in detail, but I will re-iterate the increase in new investigations commenced, up from 107 last year to 134 this year. We also saw a 24% increase in surveillances, a 16% increase in internal summary prosecutions. We put in place more than 100 financial services and credit bannings, almost double the number in the previous year.
We will shortly be releasing our quarterly enforcement and regulatory update, which indicates that this calendar year up until 30 September 2023:
- We commenced 91 investigations;
- We filed 18 civil penalty proceedings, with $141 million in civil penalties imposed by the courts;
- The CDPP has charged 23 individuals or companies as a result of ASIC referrals, with 146 criminal charges laid or companies prosecuted;
- We have disqualified 27 individuals or removed them from directing companies; and
- We have banned or suspended 58 individuals or companies from providing financial services or engaging in credit activities.
ASIC is made up of hard working, committed people with specialist expertise in their various fields. I’m proud of what we have been able to achieve together in the last financial year and the last quarter. The Annual Report and our continuing enforcement outcomes certainly reflect that.
Consumer protection and education
In addition to our strong enforcement record, I want to emphasise that ASIC is also focused on consumer and investor protection and education.
Last week, for example, we placed advertisements which aired nationally in cinemas across Australia ahead of the ‘Dumb Money’ movie screenings, which is about the GameStop short squeeze of 2021. This initiative is aimed at supporting potential investors to visit our Moneysmart website to get educated on the facts about investing. Our advice is: don’t get burnt by hype – if an investment being spruiked by fake experts too good to be true, it most probably is.
Yesterday we announced our anti-scams capability with a takedown service that allows us to identify and remove phishing and other websites which promote investment scams before they impact Australian consumers and investors. Since its commencement on 1 July, the service has identified and initiated the takedown of 2,500 investment scam and phishing websites, including:
- fake investment platform websites, often centred around cryptocurrencies or high-risk products like FX and derivatives
- impersonation scams where scammers imitate legitimate financial services businesses
- fake news article and celebrity endorsement websites.
CHESS replacement
I provided an update on the ASX CHESS Replacement in my last appearance before this committee. I can confirm we have now received the external audit of the third special report on ASX’s current portfolio, program and project management frameworks and assessment of those frameworks against internationally recognised standards. ASIC, with the Reserve Bank, is carefully considering the special report and the external audit report, and we expect both reports will be published by ASX by the end of November.
Once ASX decides on a CHESS replacement solution, we expect there to be a significant body of work by ASX, and across the industry, to deliver and implement the new system. This will be a complex technical implementation, requiring significant stakeholder engagement, Critically, we need to ensure that existing CHESS continues to be maintained. Given this complexity, we expect this work to take a number of years.
ASIC will take a holistic approach, considering the three special reports, and the decision on ASX’s CHESS Replacement solution, to determine whether further regulatory action is required.
We look forward to answering the Committee’s questions.
