ASIC’s focus on civil penalty litigation expected to ‘diminish significantly’

Jacob Uljans, of Hall & Wilcox law firm, expects that under ASIC’s plan released last week which states enforced focus on areas such as marketing and disclosure by investment managers, its involvement in civil penalty litigation will “diminish significantly”.

“… litigation (and in particular, civil penalty proceedings) will be reserved for cases involving the most substantial harm — to market integrity, to investors and to consumers. Accordingly, technical breaches of legislation, or misconduct that was inadvertent and where any investor or consumer losses were proactively remediated, are unlikely to be the focus of future litigation by ASIC under this new approach,” Mr Uljans said this week.

“The ‘express investigation’ regime, and the renewed availability of negotiated remedies such as enforceable undertakings, suggest that the potential benefits of early engagement with ASIC in connection with its investigations are now greater than was the case when ASIC’s prima facie position was to litigate.”

Mr Uljans added: “Overall, ASIC’s decision to end ‘why not litigate?’ and to be more targeted and proportionate in its use of its wide-ranging enforcement powers is a welcome development.

“The new approach will enable ASIC to continue to take appropriate action in response to egregious and harmful misconduct, while allowing for more balance in responding to technical or inadvertent contraventions where the entity concerned has promptly remediated any persons impacted.”

Mr Uljans’ comments come after ASIC listed better monitoring of financial “influencers” as a top priority in its Corporate Plan.

The news came following concerns from the industry and federal opposition that affordability issues in advice were pushing more consumers towards social media spruikers, despite the financial services minister saying it was not in the government’s purview to regulate the online space.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.