ASIC’s approach to enforcement
This information sheet (INFO 151) is for:
- people who report misconduct by individuals and entities we regulate
- people asked to assist in ASIC investigations
- individuals and entities who are the subject of ASIC enforcement actions
- members of the public.
It explains how we approach our enforcement role and why we respond to breaches of the law in different ways. This includes how we:
- meet community expectations that the most serious and harmful misconduct should be judged by the courts
- use ASIC’s broad range of regulatory tools to respond to contraventions of the law proportionately and effectively.
This information sheet deals with criminal, civil and administrative enforcement action. Other regulatory tools that we use are surveillance, engagement with industry and stakeholders, guidance and education.
This information sheet covers the following topics:
- ASIC’s regulatory powers
- how we select matters for formal investigation
- what enforcement action is available to ASIC
- how we decide which enforcement action to pursue
- how we interact with people during investigations and enforcement action
- cooperating with ASIC
- our regulatory partnerships.
We have set out our general approach to taking enforcement action in a flowchart: see the attachment to INFO 151 (PDF 175 KB).
ASIC is Australia’s corporate, markets, financial services and consumer credit conduct regulator. We regulate Australian corporations, financial markets, and financial services organisations and professionals who deal and advise in investments, superannuation, insurance, deposit taking and credit.
We regulate these entities under a number of Commonwealth laws. These laws include the Corporations Act 2001 (Corporations Act), the Australian Securities and Investments Commission Act 2001 (ASIC Act), the National Consumer Credit Protection Act 2009 (National Credit Act), the Superannuation Industry (Supervision) Act 1993 and the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021 (Better Advice Act).
We balance statutory objectives aimed at facilitating markets and promoting trust and confidence in the financial system, and taking action to enforce and give effect to the laws we administer. In turn, ASIC is empowered to take a range of criminal, civil and administrative action to address alleged misconduct within our jurisdiction. Our strategic priorities help us focus our enforcement activity to achieve our vision of a fair, strong and efficient financial system for all Australians.
Note: Details of our strategic priorities are set out in our corporate plan.
We investigate and take enforcement action to detect, disrupt and respond to unlawful conduct. In doing so, we prevent and deter actual and future misconduct, improve standards and behaviours within our regulated population, and reduce the risk of harm to Australian consumers and investors.
Each year, we assess thousands of reports about misconduct. These are brought to our attention in a number of ways, such as:
- reports of misconduct from members of the public
- through our monitoring and surveillance work
- information received from other agencies, regulators and stakeholder groups
- statutory reports from auditors, registered liquidators, Australian financial services (AFS) licensees and Australian credit licensees (credit licensees).
We carefully consider how to respond to all potential contraventions of the law, but we cannot undertake a formal investigation of every matter that comes to our attention. Instead, we are selective about the matters we pursue to ensure we use our resources to target misconduct effectively.
Note: If we conduct a formal investigation, we will generally use ASIC’s compulsory information-gathering powers. We have published a separate information sheet about these powers: see Information Sheet 145 ASIC’s compulsory information-gathering powers (INFO 145).
The factors we consider when deciding whether to investigate and take enforcement action vary according to the nature and circumstances of the suspected misconduct. However, we typically consider the following four factors when selecting matters for formal investigation and possible enforcement action:
- areas of significant harm
- broader public benefit
- issues specific to the case
- alternatives to formal investigation.
We focus our enforcement actions on preventing and addressing significant harm to consumers, markets and our financial system. We give particular attention to matters that align with our strategic priorities or otherwise involve:
- actual or potential harm to vulnerable consumers or investors, particularly if the behaviour is predatory
- misconduct that has caused or may cause widespread public harm
- misconduct that is likely to have a significant market impact, which includes its impact on market integrity and the confidence of investors and consumers
- misconduct that is systemic or widespread
- misconduct that has recently emerged or is part of a growing trend.
We are more likely to select matters that involve significant public interest or concern, or where enforcement action will benefit the public, for example:
- enforcement action that is likely to influence other market participants by sending an effective deterrence message to the market
- testing or clarifying of important legal obligations for the benefit of market participants
- misconduct that is likely to continue or escalate unless we intervene
- enforcement action that will maintain public trust and confidence in our financial system and markets.
For each matter, we also consider the following issues when determining whether to undertake a formal investigation:
- whether the matter is in our jurisdiction
- the nature of the misconduct – such as whether it was dishonest, deliberate or involved a high level of recklessness
- the impact of the misconduct – including the amount of money lost, the number of investors or consumers affected and the impact on them
- the time since the misconduct occurred – as action to address old misconduct may have less impact
- whether the misconduct is repeated or continuing
- whether reliable evidence is in our possession or likely to become available to prove the alleged misconduct.
In many cases it is more efficient and effective to address matters using other regulatory tools – such as engagement with stakeholders, surveillance, guidance and education – instead of enforcement action.
Unless there are compelling reasons to do so, we are less likely to investigate matters:
- that do not involve serious or harmful misconduct (e.g. isolated, inadvertent or minor matters that have not resulted in substantial harm)
- if we are unlikely to achieve an effective regulatory outcome by taking enforcement action (e.g. if it is unlikely to deter actual or future misconduct, or reduce the risk of harm to consumers and investors), or
- that would be better addressed by another agency or by private dispute resolution between those involved.
When we do not investigate or take enforcement action, information we have received may be used to inform our regulatory operations. For example, we may use it to:
- shape future education campaigns
- identify potential future targets for surveillance and inspections
- select future cases for possible enforcement action
- inform our public communications, warnings and guidance.
ASIC has a range of powers that enable us to respond flexibly and proportionately to a broad range of individual and corporate misconduct. We can take enforcement action to punish wrongdoers, protect investors, preserve assets, prevent or disrupt misconduct, correct disclosures, ensure affected investors and consumers are remediated, and improve compliance with the laws we administer.
There are three broad types of enforcement action that we may pursue to achieve these outcomes:
We may take one or more types of enforcement action to address a contravention of the law. The type of action we may take is subject to what the laws governing the particular misconduct allow.
The laws we administer permit the courts to impose criminal sanctions for conduct ranging from minor regulatory offences to serious offences involving dishonesty. Examples of the sanctions that may be imposed are prison terms, criminal fines and court orders (e.g. community service orders).
We pursue criminal proceedings for the most serious and harmful wrongdoing to deter similar misconduct in the future. We will generally consider criminal proceedings for offences involving serious misconduct that is dishonest, intentional or highly reckless, even when civil action is also available.
The consequences of a criminal conviction are generally more significant than the consequences of a finding of civil liability. For example:
- serious offences (e.g. breaches of directors’ duties, false or misleading disclosure, and dishonest conduct) can attract prison terms of up to 15 years or significant criminal fines
- an individual convicted of a criminal offence may be prevented from performing certain roles (e.g. company director)
- in many cases, a recorded criminal conviction cannot be expunged from a person’s record.
The evidence we gather to support a criminal conviction must meet a higher standard of proof (‘beyond reasonable doubt’) than is required in civil matters.
If we consider that we have gathered sufficient evidence to prove that a criminal offence has been committed, we will usually refer the matter to the Commonwealth Director of Public Prosecutions (CDPP) for assessment. However, we are authorised to prosecute some minor regulatory offences on our own behalf.
If a matter is referred to the CDPP, the CDPP determines whether the evidence is sufficient to commence criminal proceedings and whether prosecution is in the public interest. If criminal proceedings are commenced, the case is then prosecuted by the CDPP.
Note: For more information, see the Prosecution policy of the Commonwealth.
Civil penalty proceedings
We may commence proceedings to pursue civil penalties and other court orders for certain contraventions of the law.
If a court makes a declaration that a civil penalty provision has been contravened, it may order the wrongdoer to pay the Commonwealth a civil pecuniary penalty up to the maximum amount for the relevant provision.
The court is often empowered to make a range of other orders. Examples are:
- relinquishment orders – to remove the financial benefit (profits gained, or losses avoided) of the misconduct from the wrongdoer
- disqualification orders – to disqualify the wrongdoer from managing corporations for any period the court considers appropriate
- compensation orders – to compensate investors or consumers who have suffered a loss as a result of the contravention, including orders to prioritise compensation over penalties
- orders requiring the wrongdoer to establish a compliance, education or training program.
In a civil penalty proceeding, a lower standard of proof (‘balance of probabilities’) applies to the evidence than in criminal proceedings. However, in civil penalty proceedings the court must be satisfied to a higher degree than in other civil matters.
Other civil proceedings
We may seek interim court orders while we investigate a matter. These orders may be to:
- protect assets or prevent them from being moved or used
- prevent an individual or entity from continuing to act in contravention of the law, or
- restrain an individual who is connected to an investigation from leaving Australia while we investigate a matter.
We can also seek other court orders as a result of our investigation. These orders may:
- compel an individual or entity to comply with the law
- compel an individual or entity to make a corrective disclosure – for example, to correct a misleading or deceptive advertisement or other public statement, or
- appoint an external administrator to a company, a scheme or assets.
We may work with the CDPP or the Australian Federal Police to prevent dealings in, or to confiscate, proceeds of crime under the Proceeds of Crime Act 2002.
We may also exercise ASIC’s powers to begin a representative action to recover damages or property for others who have suffered loss: see section 50 of the ASIC Act and section 275 of the National Credit Act. We will ordinarily only do so if it would be in the broader public interest, beyond the interests of the affected consumers or investors on whose behalf we commence the proceedings.
In rare circumstances, we may intervene in private litigation or seek leave to appear and assist the court.
We encourage consumers and investors to consider alternative options to recover damages or property from wrongdoers where possible. For example, they may lodge a dispute with the Australian Financial Complaints Authority or take private legal action. For further information, see Information Sheet 180 ASIC’s approach to involvement in private court proceedings (INFO 180).
We may take a range of other enforcement actions, many of which are primarily designed to protect investors and consumers. These actions include:
- restrictions on licensed activity
- director disqualification
- disciplinary action
- product intervention orders
- stop orders
- public warning notices
- infringement notices
- court enforceable undertakings.
We do not need to go to court for these actions. However, at times we will pursue these remedies in conjunction with court action.
We may suspend, cancel or vary an AFS licence or a credit licence. We may also temporarily or permanently ban an individual from providing financial services or engaging in credit activities, or performing any functions involved in carrying on a financial services business or engaging in credit activities.
Sometimes we may take administrative action in combination with court action. For example, we might ban a licensee or representative for serious misconduct as well as commencing civil penalty proceedings against them.
More information about administrative actions that we can take in regulating financial services and credit activity can be found in Regulatory Guide 98 ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders (RG 98) and Regulatory Guide 218 Administrative action against persons engaging in credit activities (RG 218).
We may disqualify an individual from managing a corporation for up to five years if that person has been involved in two or more failed companies within the last seven years in specified circumstances.
One of these circumstances is that the liquidator has lodged a report about each company’s inability to pay its debts.
Another is that:
- an advance for the payment of outstanding employee entitlements has been made by the Commonwealth for each of those companies
- no, or only a minimal, amount is likely to be recovered of those advances, and
- the individual or companies relevantly contravened the Corporations Act or other applicable legislation during that seven-year period.
In some circumstances, we may take disciplinary action or make referrals or applications to various disciplinary bodies or courts. For example, we may:
- refer a registered liquidator to a disciplinary committee to determine if their registration should be suspended or cancelled, or apply to the court for an inquiry into the conduct of a registered liquidator
- apply to the Companies Auditors Disciplinary Board (CADB) to suspend or cancel the registration of an auditor.
We also may (and in some circumstances must):
- refer a matter to a Financial Services and Credit Panel, or
- issue a financial adviser with a warning or reprimand under the Better Advice Act.
More information about disciplinary action against registered liquidators can be found in Regulatory Guide 258 Registered liquidators: Registration, disciplinary actions and insurance requirements (RG 258).
Referrals to the Financial Services and Credit Panel, and warnings or reprimands to financial advisers, are issued under the Better Advice Act, which will take effect from 1 January 2022. Guidance will be published by ASIC in the first quarter of 2022.
The product intervention power enables ASIC to temporarily intervene in relation to a financial or credit product if we are satisfied that the product (or a class of those products) has resulted, will result or is likely to result in significant detriment to consumers.
We may make two types of product intervention orders:
- an order that applies to a specified person or persons in relation to a product, or
- an order that applies in relation to a class of products.
The product intervention power gives us the flexibility to respond appropriately to the actual or potential consumer detriment caused. For example, we may make orders to ban financial or credit products or a feature of those products, or require product issuers to provide improved information to consumers with those products.
For further information, see Regulatory Guide 272 Product intervention power (RG 272).
We may issue stop orders to prohibit individuals or entities from engaging in specific conduct if we are satisfied that there has been a contravention of an applicable law.
For example, we may issue stop orders:
- to prevent the offer, issue, sale or transfer of securities under a prospectus lodged with ASIC, or of financial products under a Product Disclosure Statement. We can do this if we believe the relevant disclosure document contains a misleading or deceptive statement or omits information that must be provided
- when we consider an advertisement or publication about securities or financial products to be defective, or
- to prohibit entities from engaging in specified conduct when there has been a relevant contravention of the product design and distribution obligations.
We may issue public warning notices to warn the community about the conduct of an individual or entity. We may do this if:
- we have reasonable grounds to suspect that conduct may constitute a breach of a consumer protection provision of the ASIC Act
- we are satisfied that at least one person is likely to suffer detriment
- it is in the public interest to issue the notice.
We administer a number of different infringement notice regimes under the ASIC Act, the Corporations Act, the National Credit Act and the Insurance Contracts Act 1984.
We can issue an infringement notice, or refer a matter to an authorised delegate to consider the issue of an infringement notice, as an alternative to court-based action. We are more likely to do this if:
- the alleged misconduct is relatively minor or less serious, and does not indicate a broader pattern of misconduct by the entity or within an industry
- we are not required to make a complex assessment of facts to evaluate whether the alleged misconduct contravened the law
- to do so would be a proportionate enforcement response, considering the nature and size of the entity and the need for general and specific deterrence.
If the recipient of the infringement notice complies with the notice, no further regulatory action can be taken against them for the alleged contravention. Compliance with the notice is not considered an admission of guilt. If the recipient does not comply with the infringement notice, we will generally pursue court-based action against them. This will usually include action for the alleged contraventions that are the subject of the notice.
ASIC has authorised the Market Disciplinary Panel (MDP) to issue infringement notices for alleged breaches of market integrity rules. More information about the MDP and its associated disciplinary framework is set out in Regulatory Guide 216 Markets Disciplinary Panel (RG 216).
Guidance on infringement notices for breaches of continuous disclosure obligations is set out in Regulatory Guide 73 Continuous disclosure obligations: Infringement notices (RG 73).
Court enforceable undertakings are a flexible remedy that we may accept to improve and enforce compliance with the law.
Court enforceable undertakings are not always used as an alternative to other enforcement action – they can also be used to complement or enhance such actions.
We will not usually accept a court enforceable undertaking:
- instead of pursuing criminal court proceedings
- where the misconduct is deliberate or involves a high level of recklessness, or
- after a matter has been referred to an ASIC delegate or another specialist body.
If a court enforceable undertaking is accepted in final resolution of a matter, we will generally require that it contains admissions that the party providing the undertaking contravened specific legislative provisions.
If the relevant party does not comply with their undertakings, we will generally seek to enforce the undertaking through the courts.
Further guidance on how we use court enforceable undertakings is set out in Regulatory Guide 100 Court enforceable undertakings (RG 100).
In deciding which enforcement action to pursue, we consider the circumstances of each case. This may result in us pursuing one or more types of enforcement action or pursuing another outcome.
What we decide will depend on the facts of each matter. We will consider the extent of the harm caused, or likely to be caused, by the conduct and the evidence that is available to establish what took place.
Table 1 sets out some of the factors that we may take into account in determining the appropriate action to pursue, and includes similar factors to those we consider in determining whether to commence a formal investigation.
Table 1: Some factors we may consider in deciding which enforcement action to pursue
Nature and seriousness of the suspected misconduct
We will consider:
Conduct of the person or entity after the suspected misconduct
We will consider:
Strength of our evidence
We will consider:
Expected public benefit in taking enforcement action
We will consider:
Likelihood of behavioural improvement and deterrence
We will consider:
We will consider:
We apply a number of principles to govern our approach to persons suspected of a contravention in the course of investigations and pursuing enforcement actions. These principles include that we will generally:
- not inform an individual or entity that they may be suspected of contravening the law during an investigation
- give individuals or entities suspected of a contravention the opportunity to explain their conduct and put forward their version of events, before we lay criminal charges or commence civil penalty proceedings
- if we conclude an investigation without taking any action – inform those individuals or entities identified as being suspected of a contravention and the individual or entity who reported the alleged misconduct of this outcome
- give an individual or entity an opportunity to be heard before making an administrative decision that directly and materially affects them.
Other matters relevant to our enforcement approach
Communications and transparency
We have a policy of transparency and we are committed to communicating publicly about all of our regulatory activities.
Making our enforcement outcomes public is an effective way to deter others from engaging in similar misconduct. We will always make enforcement outcomes public unless legal considerations require otherwise.
We may make a statement about an investigation if we consider that it is in the public interest to do so. For further information about our policy on public comment, see Information Sheet 152 Public comment on ASIC’s regulatory activities (INFO 152).
Confidentiality and privacy
We must take reasonable measures to prevent unauthorised use and disclosure of protected information and information we receive in confidence in connection with our statutory functions. We must also manage personal information in accordance with privacy laws. In some circumstances, we may be permitted or required to disclose such information. For example, we:
- proactively share information with other agencies, including the Australian Prudential Regulation Authority, to further our respective statutory obligations
- may be required to produce documents by a court
- may give access to a record of an examination to other parties who are litigating a related matter
- may confidentially disclose material to third parties during an investigation if necessary for the investigation.
For more information about our approach to protecting confidential information obtained using ASIC’s compulsory information-gathering powers, see INFO 145.
In some circumstances, a person required to provide information to ASIC is able to claim legal privilege. This privilege excuses them from disclosing information to ASIC or limits the use that can be made of that information. The most common privileges are:
- the privilege against self-incrimination
- the privilege against exposure to a penalty
- legal professional privilege.
Your rights when dealing with ASIC
For information about your rights when dealing with ASIC, see Information Sheet 9 ASIC decisions: Your rights (INFO 9) and Information Sheet 107 Guidelines for managing allegations of misconduct against ASIC officers (INFO 107).
It is our policy to encourage and recognise cooperation. Cooperating with ASIC may benefit an individual or entity suspected of a contravention in many ways. For example, we may take into account early notification of a contravention, or cooperation during an investigation, when considering whether to pursue enforcement action or what enforcement action to pursue.
When the CDPP is considering or conducting criminal proceedings, the CDPP takes into account cooperation offered or provided when making its prosecution decisions: see the Prosecution policy of the Commonwealth.
For more information about the benefits of cooperation, and the factors we take into account when assessing cooperation in investigations and criminal, civil and administrative actions, see Information Sheet 172 Cooperating with ASIC (INFO 172).
Reporters of misconduct, including whistleblowers, play an important role in identifying and reporting misconduct and harm to investors, consumers and the community. The Corporations Act provides certain legal rights and protections for people who both:
- meet the definition of an ‘eligible whistleblower’
- make a qualifying disclosure, including to ASIC.
We do not decide who is and who is not a whistleblower. We can provide you with information about those legal rights and protections; however, we cannot provide legal advice about your personal situation. If you believe you may be a whistleblower or are unsure how the law may apply to you, we recommend you seek independent legal advice.
For more general information about who can qualify for protection as a whistleblower under the Corporations Act, please see Information Sheet 238 Whistleblower rights and protections (INFO 238). For information on ASIC’s role in relation to whistleblowers, see Information Sheet 239 How ASIC handles whistleblower reports (INFO 239).
Providing immunity is one way we strengthen our ability to identify and take enforcement action against serious contraventions of the law.
Under ASIC’s immunity policy, we will consider granting immunity from civil penalty proceedings, or recommending immunity from criminal proceedings, for an individual who:
- thinks they may have contravened, with at least one other individual or entity, a provision in Part 7.10 of the Corporations Act
- wishes to apply for immunity from civil penalty or criminal proceedings
- intends to cooperate with ASIC in relation to our investigation and any court proceedings regarding the contravention.
ASIC is responsible for granting civil immunity. We will only grant immunity to individuals (not corporations) who satisfy certain conditions and we will not grant immunity from administrative or compensation proceedings.
The CDPP is responsible for granting criminal immunity. We work with and provide input to the CDPP on applications for criminal immunity.
For more information, see ASIC’s immunity policy.
We have formal and informal working relationships with a number of Australian and international regulators, law enforcement agencies, organisations and multi-agency taskforces. Our regulatory partnerships include information and intelligence sharing, joint or co-regulatory investigations and cross-border enforcement cooperation.
Through our partnerships, we share resources, capabilities and information to take a more effective and coordinated approach to enforcing the law.
Where can I get more information?
- Read our related information sheets:
- INFO 9 ASIC decisions: Your rights
- INFO 107 Guidelines for managing allegations of misconduct against ASIC officers
- INFO 145 ASIC’s compulsory information-gathering powers
- INFO 152 Public comment on ASIC’s regulatory activities
- INFO 165 Claims of legal professional privilege
- INFO 172 Cooperating with ASIC
- INFO 180 ASIC’s approach to involvement in private court proceedings
- INFO 238 Whistleblower rights and protections
- INFO 239 How ASIC handles whistleblower reports
- Download our related regulatory guides:
- RG 34 Auditor’s obligations: Reporting to ASIC
- RG 73 Continuous disclosure obligations: Infringement notices
- RG 98 ASIC’s powers to suspend, cancel and vary AFS licences and make banning orders
- RG 100 Court enforceable undertakings
- RG 216 Markets Disciplinary Panel
- RG 218 Administrative action against persons engaging in credit activities
- RG 254 Offering securities under a disclosure document
- RG 258 Registered liquidators: Registration, disciplinary actions and insurance requirements
- RG 272 Product intervention power
- RG 274 Product design and distribution obligations
- Read ASIC’s immunity policy
- Read the Prosecution policy of the Commonwealth
- Visit our website
- Call ASIC on 1300 300 630 or submit a question online
Please note that this information sheet is a summary giving you basic information about a particular topic. It does not cover the whole of the relevant law regarding that topic, and it is not a substitute for professional advice. Omission of any matter on this information sheet will not relieve a company or its officers from any penalty incurred by failing to comply with any statutory obligations within the laws we administer.
You should also note that because this information sheet avoids legal language wherever possible, it might include some generalisations about the application of the law. Some provisions of the law referred to have exceptions or important qualifications. In most cases your particular circumstances must be taken into account when determining how the law applies to you.
This is Information Sheet 151 (INFO 151), updated in November 2021. Information sheets provide concise guidance on a specific process or compliance issue or an overview of detailed guidance.