Advice misconduct tops ASIC enforcement outcomes

The Australian Securities and Investments Commission (ASIC) has released a summary of enforcement outcomes for the six months from 1 January 2024 to 30 June 2024, with financial advice misconduct the most common within the financial services sector.

According to the regulator, there were 33 enforcement outcomes for financial advice misconduct in the period, with 31 settled through administrative action, just two through civil action, and none resulting in criminal action.

The overall number is up from the previous six months, which saw 26 enforcement outcomes for financial advice misconduct, however, the prior period saw two criminal enforcement outcomes.

Investment management misconduct was the next largest cohort with 14, one of which was criminal and five civil. The only other criminal enforcement outcome during the six months was related to credit misconduct.

Overall, the regulator said that during the first half of the year, it was successful in 95 per cent of its civil and criminal prosecutions, leading to $32.2 million in civil penalties and nine criminal convictions.

“ASIC remains committed to supporting a fair, strong and efficient financial system for all Australians,” said ASIC chair Joe Longo in the enforcement and regulatory update.

“We act against misconduct, pursuing court-based outcomes and substantial penalties. We hold to account those who contravene the law and we deter similar misconduct from happening in the future.”

ASIC also said 45 individuals were removed or restricted from providing financial services or credit in the first half of 2024. It also launched 63 new investigations, commenced 12 new civil proceedings, and completed 550 surveillances.

Longo also pointed to the regulator’s work on review of cold calling operators that use high-pressure tactics to encourage superannuation switching, which he said “put the superannuation and financial advice sectors on notice to do more to protect members from these unscrupulous actors”.

“As a regulator, we are continually faced with decisions about where to focus our resources – when it is preferable to provide guidance and when it is appropriate to take enforcement action,” he said.

“We pursue court-based outcomes in cases of serious misconduct – and where it sends a strong message of deterrence to others. We welcome reports of misconduct from the public, which provide valuable intelligence to help us direct our resources.”

Looking at ASIC’s regulatory developments timetable, which outlines proposed time frames for its regulatory work, there was only one item on the agenda. ASIC said its work to remake Class Order [CO 14/923] Record-keeping obligations for Australian financial services licensees when giving personal advice, which sunsets on 1 October 2024, is expected to be complete by the end of September.