ASIC recently released its Corporate Plan 2015-2016 to 2018-2019 and Focus for 2015-2016 (the Plan).
The Plan summarises ASIC's vision, focus and long term strategic priorities, highlighting in particular the challenges it faces in the coming years flowing from increased globalisation, structural changes in markets, financial product innovation and digital advancements.
Areas that ASIC has identified as requiring its immediate attention over the coming year include:
- Gatekeeper conduct – risks associated with poor gatekeeper culture and conduct in areas involving responsible entities, lenders, markets and directors, auditors and insolvency practitioners;
- Retail product design and distribution - the risk of complex financial products being misunderstood or mis-sold to consumers;
- Financial advice - the potential for vertical integration along the financial product distribution chain to make conflicts of interest worse and heighten the risk of inappropriate in-house products being sold to consumers;
- Globalisation - cross-border developments resulting in more fragmentation across businesses, services and transactions, potentially compromising market integrity and outcomes for investors and financial consumers; and
- Cyber attacks - the increasing incidence, complexity and reach of cyber attacks and the need for improved cyber-resilience.
ASIC's intended approaches to these issues include:
- reviewing culture and incentives, and cyber resilience, as part of its risk-based surveillance;
- targeting market operators and participants (including issuers, brokers and investment banks) for poor systems to manage conduct risk, or to handle conflicts of interest or confidential information
- monitoring innovations and new financial products and services;
- drawing on behavioural economics and data analysis to inform responses to identified consumer and market issues, and driving behavioural change by product providers where potential misalignment between product design or promotion and consumer interests is identified;
- enhancing professionalism and ethical standards of financial advisers;
- monitoring lenders' compliance with responsible lending obligations;
- co-operating with international regulators and implementing international standards;
- taking enforcement action where misconduct is identified.
Clients should be aware of the potential for greater ASIC scrutiny and possible enforcement action where there has been any misconduct in relation to the above areas of focus.