Looking ahead: ASIC’s priorities


Speech by ASIC Chair Joseph Longo to the Committee for Economic Development of Australia (CEDA), 23 August 2022.

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It is great to join you in Melbourne today, and welcome to those of you joining online.

I would like to begin by acknowledging the traditional owners and custodians of the lands on which we meet today, and to pay my respects to their elders past, present and emerging. I extend that respect to Aboriginal and Torres Strait Islander people present today.

This event is my first address to the Committee for Economic Development of Australia (CEDA). I am into my second year as the ASIC Chair and, with little danger of overstatement, there is a lot going on in ASIC’s ever-broadening regulatory mandate.

Today I want to talk to you about key trends both here and abroad, and how these shape ASIC’s priorities for the year ahead.

I hope the discussion to follow will be lively.

The regulatory and economic landscape

As we navigate what we all thought would be a post-pandemic world, societies and economies are facing complex change and disruption. The way we live and work is shifting, and so is the regulatory landscape.

The recent CSIRO report, Our future world, highlights the key global megatrends underpinning this disruption – including climate change, geopolitical shifts, the digital and data economy, artificial intelligence, and our ageing population.

Internationally, governments, regulators and firms are sharpening their focus on climate change. Closer to home, we have witnessed the devastating impacts of more disruptive weather patterns and natural disasters.

Technology and data are rapidly transforming the financial ecosystem – this trend has been evident for some time and is accelerating. More than ever, robust cybersecurity and cyber resilience capabilities are critical. Virtually every participant in our economy handles data in one form or another.

I was reminded recently of a speech I gave at an Australian Competition and Consumer Commission (ACCC) event, where I said:

The cyber world has made dramatic changes to the way the financial services industry operates. The independent forces of technology and globalisation will continue to be the major impetus for innovation and structural change in electronic commerce for the foreseeable future. It is these developments which pose both new challenges and opportunities for ASIC.

Well, that was just 24 years ago – in 1998 – when we thought that ‘technology’ was simply grappling with the internet and what it had to offer.

The technology we use now in our day-to-day lives has leapt ahead in ways, and at a speed, many of us could not have anticipated. ASIC needs to be a digitally savvy regulator so that we can keep pace.

Technology, as well as recent reforms in our financial system, are reshaping what is expected of industry, and the tools and data available to ASIC.

I want ASIC to be an ambitious and confident regulator. One that is focused on the future, always looking ahead.

Our remit, when compared to our international peers, is remarkable. As commentators have frequently observed, no other corporate regulator in the world has the range of responsibilities that have been given to ASIC.

However, there are some constants. Ultimately it is ASIC’s capacity, when the circumstances warrant it, to take forceful enforcement action that lies at the heart of its effectiveness as a regulator.

Our appetite to take on matters has not diminished. Where we see egregious misconduct, we will act. Our action will be targeted, timely and proportionate.

Rather than attempting to be ‘everywhere’, we must prioritise the areas of greatest harm and take action to protect vulnerable people. Being a regulator is all about choices, so we must be targeted in the way we deploy resources.

ASIC’s priorities

Now to our priorities.

Yesterday I released ASIC’s Corporate Plan, outlining our core external and internal priorities, and the action we plan to take to give effect to those priorities now and over the next four years.

Of course, we will remain responsive to new trends and issues.

We have identified four external strategic priorities:

  • product design and distribution
  • sustainable finance
  • retirement decision making, with a focus on superannuation products, managed investments and financial advice, and
  • technology risks, with a focus on digitally enabled misconduct.

Our Corporate Plan describes eight core strategic projects that set out the action ASIC plans to take to advance these four priorities.

In the time I have today, I will outline our approach on four of these projects:

  • improving sustainable finance practices and disclosure of climate risks
  • supervising and enforcing the design and distribution obligations (DDO)
  • addressing market integrity issues and investor harms in relation to crypto-assets (or cryptocurrency), and
  • disrupting and combatting financial scams to protect consumers.

Why are these areas important to us? Each responds to a key emerging challenge that we face, each is focused on protecting people participating in the financial system and each is an explicit enforcement priority for us.

No doubt, these are issues that many of you are grappling with, too.

Sustainable finance

First, to sustainable finance practices.

As climate change and sustainability become the dominant themes of our times, we are seeing investment increasingly being driven by values-based decisions. In response, there has been a proliferation of investment products and companies appealing to consumers with sustainable or ‘green’ investments and ‘net zero’ emission promises.

A core part of ASIC business is to ensure that firms comply with disclosure requirements and do not mislead investors. It follows that improving climate-related governance and disclosure are key priorities for ASIC.

Regulation of climate and sustainability promises is a global issue. Australia relies on more than $4.1 trillion in foreign investment to help power our industries, fund our services and create jobs.

As more and more Australian firms release financial reports and disclose climate risks, we need to speak the same language as our global peers.

ASIC strongly supports the development of globally comparable standards. We cannot go it alone, with our own language or our own standards.

Our fellow regulators agree, and that’s why we lodged a joint submission to the International Sustainability Standards Board (ISSB) (PDF 220 KB) on its proposed standards.

We will continue to engage with peer regulators here and overseas to ensure we are aligned on this.

Half of the ASX 200 companies are already voluntarily reporting against global benchmarks, but our surveillance shows more needs to be done.

Of course, climate-related disclosure must comply with the law. Crucially, the information must be useful and accurate for investors. If you make net zero claims, you must have substance behind those claims. Aspiration on its own is not enough – the bar is set much higher.

We want to ensure that firms moving towards net zero do so with integrity – fostering trust and practising transparency.

Through our supervisory work, we’re testing ‘green’ investment offers and targeting false claims by firms. Labels or headline statements about a product’s green credentials cannot be misleading.

If a product issuer promotes an investment opportunity and states they will ‘take sustainability into account’ as part of their strategy, but doesn’t explain how, this simply isn’t enough. How is this going to help investors understand the product’s investment strategy?

Firms are expected to explain how they will ‘take sustainability into account’, using specific and clear language. We are actively monitoring the market, looking for dubious claims (also known as ‘greenwashing’).

Serious breaches will fall foul of the misleading and deceptive disclosure provisions in the Corporations Act, and we will take enforcement action.

Product design and distribution

I’ll turn now to the design and distribution obligations – or DDO.

The DDO regime is a gamechanger for the regulation of financial product design and distribution. Selling products now requires clear consideration of the objectives, financial situation and needs of the consumers being targeted.  

DDO is about protecting consumers’ interests and reducing the risk of harm caused by poor design, distribution and marketing.

The obligations became law in October 2021, and we have now shifted our focus from facilitating implementation to active supervision and enforcement.

Recently, we investigated a firm called Responsible Entity Services (RES) because we were concerned about a product being marketed to retail investors and others, including retirees. RES was offering an opportunity for people to invest in the Pleasure Point Mine via a related fund. RES issued a target market determination (TMD), which is a mandatory public document.

In the case of RES, the product was a high-risk, illiquid, unlisted, single-asset investment. Its only underlying asset was a loan, which meant any potential returns for investors was wholly dependent on the borrower’s (Pleasure Point Mine) ability to repay the loan.  

However, RES’s original TMD included people who intended to use the investment as a core component of their portfolio, and others seeking high-capital growth.

We considered that the product didn’t meet the needs of the investors in the original target market, and placed an interim stop order on RES.

A TMD is a critical document requiring careful thought and consideration to get right. Have I identified the targeted consumers correctly? Have I thought through what distribution conditions and restrictions are appropriate? And also, importantly, have I correctly specified the review triggers that reasonably suggest the TMD is no longer appropriate?

RES shows that where issuers get target markets wrong, we will step in to prevent these products being sold.

In the months ahead, you can expect ASIC to focus on sectors where consumers are at the greatest risk of harm.

We have targeted surveillance action underway to identify and disrupt poor conduct in relation to high-risk and complex products, such as over-the-counter (OTC) derivatives and crypto.

We are reviewing product governance arrangements in the small amount credit and buy now pay later sectors. We’re looking at how TMDs were developed, including the data, metrics and other key considerations that underpinned these important public documents.

We’re also conducting a surveillance of a sample of TMDs in the superannuation and managed funds sectors, and engaging with major supervised institutions on how they are implementing DDO. Where our surveillance work identifies poor consumer outcomes, we will disrupt the sale of the products using stop orders or take court-based enforcement action.

In future, you can expect us to look closely at the way firms collect, assess and respond to data about consumer outcomes from their products. It’s critical that firms respond to poor outcomes that they identify by making the necessary changes to either their products or their product governance arrangements.

These obligations require firms to be proactive. It’s not a case of set and forget.

Ultimately, we want to see the long-term benefits of DDO being realised. Strong and robust compliance with DDO will support fairer outcomes for consumers and a stronger financial system for all Australians.


Now to crypto, a financial innovation full of promise, celebrity status and volatility.

In recent years, there has been a sharp increase in retail investor interest and activity in global markets, including crypto. This upswing was amplified further by the onset of the pandemic.

We recently released research focused on investor behaviour from the onset of COVID-19. Of the 1,000 investors surveyed, more than 50% were aged 18–34, and our research showed that cryptocurrency was the second-most common product type (held by 44% of respondents) after Australian shares (which were held by 73% of respondents). For a quarter of crypto investors, it was their only investment. 

Often drawn in by promises of high returns and slick advertising, many investors believed their money was safe. But as we have seen, the value of crypto-assets has dropped by around US$2 trillion in recent months.

In May this year, the so-called ‘stablecoin’ Terra uncoupled from its algorithmic peg to the US dollar and plummeted in value, losing US$40 billion in one day.

ASIC’s essential warning to consumers considering crypto-assets is this: They are highly volatile, inherently risky, and complex. I’m concerned that investors do not fully understand what they’re investing in, or the very significant risks. The research I referred to earlier revealed that as many as 80% of those investors did not even consider crypto risky.

That is a major concern. ASIC will continue to prioritise this area over the next 12 months and beyond. Our crypto regulatory strategy has three cornerstones.

First, we support the development of an effective regulatory framework and greater regulatory clarity for this class of products.

We welcome yesterday’s announcement by the Treasurer, Assistant Treasurer and Assistant Minister. In particular, we welcome the focus on consumer protection.

Second, we will continue to take enforcement action to disrupt and deter harmful products already within ASIC’s jurisdiction. This includes those that mimic traditional products or seek to circumvent regulation.

And third, we are collaborating and cooperating with our domestic and international peers. Coordinated action and standard setting is important because the crypto ecosystem does not observe borders or the jurisdiction of any single Australian regulator.

Insights and intelligence gained internationally help us prepare for emerging risks and inform our work with Treasury and the Government on the most effective regulatory framework.

We are also seeing an increase in scams, many purporting to be linked to crypto-assets. This brings me to our work to disrupt scams.

Disrupting scams

It’s no use thinking that scams are only for the gullible. These days, there is a scam for every person. We are all vulnerable. I would like to also emphasise that scams are an area where our corporate allies are key.

Australians lost a record amount to scams in 2021 – more than $2 billion dollars. Investment scams – our focus – were the highest loss category, at more than $700 million dollars.

Those losses represent great harm. Think of young parents caught up in a payment redirection scam as they attempt to purchase their first home. Think of the distress felt by an investor discovering that an email offering corporate bonds – seemingly from their own bank – had in fact been false, and their savings are gone.

The size and scale of the problem is immense. It can feel like a game of cat and mouse as we pursue scammers and try to get ahead of the increasingly sophisticated techniques they use.

Our strategy is to disrupt their operation, using innovative, data-driven approaches to drive early intervention and, where possible, prevent loss to consumers in the first place.

As I said earlier, our corporate allies are key to scam-proofing Australia, and financial institutions are right in the middle of this issue. 

We have work underway with several banks to look at their scam identification and response strategies. Many banks have sophisticated scam detection systems in place already, but further improvement is needed.

Over the last few months, we’ve met regularly with digital platforms – including Google – to discuss advertising of financial products.

You may have seen Google’s recent announcement requiring advertisers wanting to promote financial products and services in Australia to demonstrate they are licensed by ASIC or are exempt from being licensed.

This is an expansion of the verification process that it put in place in the UK last year, via the Financial Conduct Authority. 

We have recently worked with the ACCC to trial a service that takes down fraudulent websites. The trial was very successful, and we are working with third-party service providers to digitally disrupt investment scams.

We are also complementing our regulatory and enforcement interventions with regular and targeted warnings, aimed at educating consumers about scam trends and specific scam threats as they emerge.

This is a challenge that ASIC cannot confront alone. Coordinating our response to scams with industry, other regulators and consumers is critical to protecting people from further losses and preserving the integrity of financial markets.

Regulatory efficiency

Before concluding, I’d like to turn now to three broader regulatory efficiency initiatives underway at ASIC.

These are important initiatives for me. They contribute to how we can administer the law more effectively, and how we can make it easier for you to interact with us.

We are taking a coordinated approach to this work. Earlier this year we consulted widely, speaking to more than 70 stakeholders. As you might expect, we got plenty of feedback. Using that feedback, we have started work on three initiatives aimed at streamlining our interaction with you.

First, we will look at how we engage around the development and maintenance of our regulatory guidance, recognising that this is a core aspect of our regulatory footprint. We also want to publish a more detailed regulatory timetable, to help you know what is coming and to support you in your planning.

The second work program looks to enhance our engagement when we use compulsory powers to gather information. The aim is to help ensure our engagement is transparent, targeted and efficient. We want people to understand what the relevant investigation is about, the steps involved and what is expected of them.

Third, we are reviewing our stakeholder engagement approach – exploring a more regular and multi-channel engagement, using ASIC’s engagement with licensing applicants as a case study. This will help you to better understand our priorities, expectations and decisions.

All of this work supports my ambition for ASIC to be confident in discharging our regulatory and enforcement responsibilities, to serve and advance the public interest more effectively.

I look forward to our discussion and I am happy to take your questions.

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