Parliamentary Joint Committee on Corporations and Financial Services - Opening statement - 26 November 2021
Speech by ASIC Chair Joe Longo at the Parliamentary Joint Committee on Corporations and Financial Services, Thursday 26 November 2021.
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Good morning Chair and Committee members.
Chair, congratulations on your new role, I’m not sure you would count it as a promotion, but we are very pleased to have you on this important committee once again.
I am joined by Deputy Chairs Karen Chester and Sarah Court, and Commissioners Cathie Armour, Sean Hughes and Danielle Press. Also appearing with us is ASIC’s Chief Operating Officer Warren Day, General Counsel Chris Savundra, Executive Director of Strategy Greg Kirk and Senior Executive Leader, Dr Rhys Bollen.
It is now just on six months since I took on the role of ASIC Chair. A lot has happened in that short time.
Much of ASIC’s work has been coordinated by teams working remotely and across different locations, during periods of lockdown and travel restrictions. I have witnessed first hand the commitment of ASIC staff to work extremely hard and to high standards, wherever and whatever the circumstances.
Let me recap on just a few of the activities with which ASIC has been involved.
On Wednesday, ASIC imposed licence conditions on the ASX and created accountability mechanisms for its board and senior management in response to an investigation on the ASX outage in November 2020. The conditions we imposed included appointing an independent expert to assess the remediation, appointing an independent expert to assess the ASX’s assurance program for the implementation of the CHESS Replacement Program and, while the program is ongoing, requiring attestations from senior executives and the board of the ASX about technology readiness.
As an organisation, we remain keenly attuned to the fast-shifting crypto landscape and continue to work with domestic and international counterparts to consider regulatory responsiveness to crypto. We are contributing to the Treasury-led CFR Working group. We also took the first tentative step towards regulating crypto by issuing guidance for exchange traded products with crypto as underlying assets. Our guidance sets out good practices for market operators and market issuers in meeting their existing obligations, so that crypto-asset ETPs can be facilitated in a way that maintains Australia’s fair, orderly and transparent markets and key investor protections.
On the 1st of November, the director ID regime began in earnest, with applications opening via the Australian Business Registry Services.
We are supporting industry as it adapts to a series significant Hayne Royal Commission reforms. A raft of significant new legislation came into effect in early October, including the introduction of design and distribution obligations, and updates to breach reporting and anti-hawking laws. ASIC is taking a reasonable approach to transition in the early stages.
An enormous amount of work was done across ASIC to prepare for these changes, including developing the necessary guidance to support industry to transition to the new standards and engaging closely with industry to assist its implementation.
We are also close to finalising the enforcement investigations flowing from the Royal Commission, with the last remaining investigation almost completed. ASIC has had a series of significant enforcement outcomes, including against Westpac for breaches of the best interests duty, against NAB for fee disclosure statement breaches, and against CBA for consumer credit insurance failures.
Looking ahead to 2022.
ASIC has established a new Regulatory Efficiency Unit that sits within the Office of the Chair. As outlined in ASIC’s Corporate Plan and our Statement of Intent, the Unit will look, in particular, at how ASIC administers the law and regulates the financial services industry, to identify unnecessary frictions, minimise the costs of regulatory requirements, and ultimately drive better compliance
We welcome the opportunity to engage with the newly constituted Financial Regulator Assessment Authority, or ‘FRAA’. In the coming months we will work with the FRAA as it assesses ASIC’s effectiveness and capability, so that ASIC and – ultimately - business and consumers, can benefit from the process.
We continue our work on digital transformation, to be a modern, digitally-enabled regulator, through the ASIC Data Strategy being implemented by the Chief Data and Analytics Office. We have begun using our certified ‘data lake’ that provides ASIC with a platform from which all of its data activity on the financial services industry can be brought together, shared, reused and collaborated on through cutting edge data and analytic tools.
Last week, ASIC appeared before the Senate inquiry into the collapse of the Sterling Income Trust and answered questions in relation to our oversight of the matter. ASIC provided a supplementary submission to the Committee on Wednesday.
In concluding my opening remarks, I want to affirm the message that I have conveyed in different fora recently: that ASIC will continue to be a strong and targeted law enforcement agency. We will use the full suite of tools and powers to address wrongdoing.
But as always, our enforcement approach will be responsive to changes in our regulatory environment.
We look forward to taking the Committee’s questions.