New Year, New ASIC: the 2024 enforcement priorities

Each year ASIC announce their enforcement priorities, giving industry and stakeholders the ‘heads up’ on what the regulator is looking to target in the year-ahead. The enforcement priorities announcement is structured as a list of categories split into specific priorities for the year ahead and ASIC’s enduring priorities.

In announcing the priorities at the ASIC Annual Forum in late 2023, Deputy Chair Sarah Court commented that the regulator is ‘taking matters to court and pursuing higher penalties than ever before. In delivering against our priorities this year, we took action against some of Australia’s biggest corporations. And we are not deterred from taking challenging cases where legal outcomes are not guaranteed’.

This article will examine the enforcement priorities list in the context of ASIC’s objective to take more extensive enforcement action in 2024. The article serves as a timely reminder to industry participants and stakeholders to pay close attention to regulatory compliance for the period ahead.   
 

Striving for a ‘culture of compliance’ – ASIC’s key new priorities & direction  

ASIC have included two new priorities for 2024 concerning the superannuation industry, and these include a focus on misconduct relating to the erosion of superannuation balances as well as member services failures.

The regulator has also set out its intention to take action regarding used car financing to vulnerable consumers and gatekeepers such as auditors, registered liquidators, financial services and credit licensees who do not comply with their legal obligations

Also included in the suite of new priorities is ASIC’s commitment to enforce greater compliance relating to technology and operational resilience for market operators and participants in order to maintain market integrity. This particular priority stems from what ASIC described as an increasingly digitised and automated financial markets sector which has, in turn, led to an increase in technical and operational risks faced by market participants and market operators.

Not backing down – adopting a riskier approach to litigation

ASIC did not mince their words when it came to putting industry participants and stakeholders on notice regarding their preparedness to litigate. In line with their objective to ensure emerging spaces within the Australian financial markets remain in check, they have commented that they are willing to take more matters to court to ensure compliance with a market standard and at the same time bring emerging corporate issues into the national spotlight. This clear outline from ASIC also included their readiness to pursue a riskier litigation strategy which includes taking matters before the courts which in the past might otherwise be avoided by the corporate regulator. 

''We must test the scope of the laws that Parliament has enacted to protect market integrity'', Ms Court stressed at ASIC’s Annual Forum. In a similar vein ASIC Chairman, Joe Longo has identified that testing the ‘regulatory perimeter’ inside the courtroom will undoubtedly lead to some losses, it still serves a purpose by highlighting where new laws need to be legislated in order to protect consumers and create a legitimate corporate framework.

Looking ahead, Mr Longo identified the emerging fields of automated financial services, cryptocurrency and the incessant increase in use of artificial intelligence (AI) as areas where ASIC will dedicate more resources to ensure illegitimate market practices are tried and tested in court.

Enduring priorities in 2024

ASIC have specifically set out which priorities endure in 2024 and will continue to remain in their lens moving forward. These include:

• misconduct damaging market integrity, including insider trading, continuous disclosure breaches and market manipulation;
• misconduct impacting First Nations people;
• misconduct involving a high risk of significant consumer harm, particularly conduct targeting financially vulnerable consumers;
• systematic compliance failures by large financial institutions resulting in widespread consumer harm;
• new or emerging conduct risks within the financial system; and
• governance and directors’ duties failures.

Greenwashing

Ms Court made specific mention of ASIC’s readiness to continue their extensive surveillance and enforcement in the greenwashing space. This will include issuing guidance, proceedings against those businesses engaging in this form of misconduct, and sending infringement notices. In particular, the focus in this area will be targeted at:

• net zero statements and targets made without a reasonable basis;
• the use of terms like ‘carbon neutral’, ‘clean’ or ‘green’ that are not founded on reasonable grounds; and
• the use of inaccurate labelling or vague terms in sustainability-related funds.

ASIC have also noted that high-cost credit and predatory lending practices will remain a priority through 2024; so too will insider trading, market manipulation and continuous disclosure given the potential harm that arises from them.

Off the back of ASIC’s 2024 enforcement priorities announcement and lingering market criticism labelling them a toothless tiger in over their head, expect to see decisive and high-profile enforcement action in the year ahead.

Industry participants and stakeholders in financial markets and the corporate space more broadly should be reviewing their systems and policies in light of ASIC’s 2024 priorities to ensure they are complying with ASIC’s guidance and not at risk of attention from the nation’s watchdog.    

More information from Maddocks

For more information on the ASIC 2024 enforcement priorities or to seek advice on the effect these may have on you or your client’s business, contact Maddocks on (03) 9258 3555 and ask to speak to a member of the Tax and Structuring team.

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