ASIC’s Annual Report for 2016-17 was tabled in Parliament on Thursday 26 October 2017. There is encouragement for companies to innovate and grow in the financial technology space, and warning signs for those who fail to abide by their obligations.

The report provides details about the activities that have been undertaken in order to satisfy ASIC’s three primary goals. These goals are:

  • promoting investor and consumer confidence and trust
  • ensuring fair and efficient markets
  • providing efficient registration services

Rather than strictly acting as a ‘big brother’ for financial markets, ASIC has been spending a lot of time and resources developing and promoting its financial education tools to help improve the financial capability of individuals. This has been achieved through the ASIC MoneySmart website (which has been visited over 7 million times this period) and the development of specific resources that target specific communities, like the Simple Money Manager tool, which helps people from non-English speaking backgrounds with advice on everyday budgeting.

ASIC has also continued to promote and foster financial technology businesses in Australia, through the Innovation Hub and the regulatory sandbox. ASIC has produced guidance on blockchain and distributive ledger technology, as well as a report and round-table discussion outlining ASIC’s future approach to regulatory technology to ensure ASIC and Australian financial markets are at the top end of the world when it comes to technology in markets and regulation.

2016-17 was a busy year for ASIC’s surveillance and enforcement wing. Surveillance and enforcement is ASIC’s most important function, and takes up around 70% of regulatory resources. In 2016-17 ASIC:

  • secured more than $837 million in compensation and remediation for Australian investors and consumers
  • secured 20 criminal convictions, with 13 people jailed
  • prosecuted 409 directors for 723 offences in failing to assist registered liquidators
  • secured approximately $5.2 million in civil penalties
  • banned 208 people and companies from credit activities and financial services
  • disqualified 51 people from directing companies
  • issued 74 infringement notices, totalling $4.3 million in penalties

On the balance sheet, ASIC raised $920 million in 2016/17 for the Commonwealth, up 5% from 2015/16. ASIC’s expenses were $392 million, up 6% from 2015/16. This was due to an increase of 10% in appropriation revenue and represents a general increase in staff and supplier expenditure. The deficit between appropriation revenue and expenses fell to $43 million (20%) due to the large increase in appropriation. This suggests that although ASIC is expanding from new government funding, it is still under pressure from the government to keep its expenses minimal.

ASIC believes that the industry funding regime, due to cover ASIC’s costs from the 2017-2018 financial year, will help industry understand ASIC’s work and the cost of doing the job.

Outgoing ASIC Chairman Greg Medcraft said, ‘Ensuring that Australians can have trust and confidence in the financial system and that markets are fair and efficient is at the heart of everything we do at ASIC.’

It is clear from the Annual Report that ASIC is continuing to make the transition to a proactive, forward-looking regulator. Looking ahead, ASIC’s new chairman James Shipton will come in at a time where Government is encouraging ASIC to be more proactive than reactive, which should be good news for investors, consumers and businesses looking to bring new types of financial technology to Australian markets.

On the flip side, Mr Shipton’s stance on poor corporate culture, along with proposed increases in penalties, means that ASIC will not be turning off the spotlight on corporate and financial services misconduct. With more scrutiny on the horizon, it is vitally important that businesses and financial professionals are compliant with their legal and regulatory obligations.