Conviction rates plummet: ASIC faces backlash and calls for accountability

Data submitted by the Commonwealth Director of Public Prosecutions (CDPP) to the Senate economics references committee’s inquiry into the corporate regulator revealed that in 2022–23, only 50 per cent of cases taken to court by the Australian Securities and Investments Commission (ASIC) resulted in a conviction rate.

This compares to 100 per cent of cases taken to court in 2021–22, 83.9 per cent in 2020–21, and 100 per cent in 2019–20.

Earlier this month, Senator Andrew Bragg said CDPP data confirms that “ASIC is going backwards”.

The data also revealed a significant decrease in the number of cases being referred to the CDPP by ASIC.

In the 2018–19 financial year, ASIC made 86 referrals, compared to 41 referrals in the 2022–23 financial year. So far, for the current financial year, ASIC has only made two referrals.

In the year to date, only two cases have been referred.

Moreover, the CDPP disclosed that during the same period, the rate of prosecutions initiated from ASIC referrals plummeted from 75.6 per cent to 19.5 per cent.

“These figures signal that ASIC has made Australia a haven for white-collar crime. ASIC has given up on their sole obligation to enforce corporate law,” Mr Bragg said at the time.

“These are ugly statistics,” he added.

ASIC avoiding ‘all accountability’

During the last Senate economics references committee hearing into ASIC, which took place on 4 October, advisers Ross Smith and Peter Alvarez shared their experiences with the ballooning regulatory levy that has tripled over the past year alone.

Mr Smith argued that the levy is “totally wrong” and suggested that ASIC should be claiming its enforcement costs against the personal indemnity insurance held by advisers.

In its latest Cost Recovery Implementation Statement (CRIS), published in June, ASIC confirmed that to cover the cost of regulating licensees that provide personal advice to retail clients, which stood at an estimated $55.5 million in 2022–23, advisers will pay a minimum levy of $1,500 plus $3,217 per adviser.

Under the former government’s ASIC levy freeze, the costs charged to the sector amounted to $22.8 million. This meant that at the time, advisers were charged a minimum levy of $1,500, plus $1,142 per adviser.

Addressing the Senate committee, Mr Smith alleged that the rising levy has triggered the mass adviser exodus seen over recent years.

“The levy has caused adviser numbers to drop from 28,000 in 2018 to around 16,000 in 2023 for a population of 26 million. This is ridiculous,” he said, adding that the levy is also responsible for driving accountants away from personal advice.

“ASIC seems to avoid all accountability,” he said.

Also speaking before the committee, Peter Alvarez, financial adviser at Navigate Wealth, argued that if advice is too costly to provide, the legislation is likely no longer fit for purpose.

“If the advice industry today is expensive to regulate, investigate, enforce, and prosecute, it’s because successive parliaments have avoided a wholesale reform of the multiple acts of Parliament that govern our profession,” Mr Alvarez said.

“We, the industry, are not to blame for 20 years of bad legislation.”

Chairing the committee, Senator Bragg referred to the uptick in ASIC fees as “quite punitive” for financial advisers.