Inside ASIC’s box of mystery

by Miklos Bolza13 Nov 2017
In its role as national financial watchdog, the impacts of the Australian Securities & Investments Commission (ASIC) on people and businesses cannot be understated.

David McGuinness, senior executive, financial services enforcement at ASIC acknowledged these effects during a media briefing on Thursday (9 November), highlighting the “difficult decisions” that the regulator had to take.

“We have powers to freeze assets, we have powers to stop people leaving the country, we have powers to stop businesses from running. We do recognise the consequences of that but invariably we have to take that action despite the fact that it won’t be popular.”

Current governance specifies that ASIC looks at a number of key factors before deciding on whether to take on a case or not.

“The fact is ASIC does not, and I expect never will, investigate every report of misconduct that we see. We simply can’t. We’re no different to other law enforcement agencies in that way: we have to make some strategic calls and we have to make decisions around what we can look at and put our resources to.”

McGuinness highlighted a few important considerations that ASIC takes when deciding whether to take action, including:
  • Are the allegations significant?
  • Does the conduct create a potential risk of harm?
  • How many people may be affected?
  • Does the conduct indicate systemic issues?
  • Does it include dishonesty and fraud?
  • Is there any evidence available?
  • What will be the time and cost of the investigation?
  • Is it a public interest matter?
Speaking on ASIC’s recently proposed directions power, which is currently under consultation, McGuinness told Australian Broker that the regulator supported the move.

“The powers would provide sufficient flexibility to enable ASIC to address a range of concerns about a licensee’s business practices at an early enough stage to afford sufficient protection for financial consumers.”

Details on the actual use of these powers would be determined by how the legislation is framed in the event the government decides these powers are something ASIC should gain, he said.

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