Check against delivery

Good morning everyone.

I would like to begin by acknowledging the Ngunnawal people as the traditional owners and custodians of the land on which we are gathering today – and by paying my respects to their elders past, present and emerging and extending that respect to any First Nations people with us here today.

One of ASIC’s core functions is to promote the confident and informed participation of consumers and investors in our financial system – and that’s why I was pleased to accept this invitation to speak at this Advice Policy Summit.

Not everybody needs or seeks advice to support their participation in the financial system. But when they do, it’s important that they have access to good quality advice that meets their needs and is delivered with independence and integrity.

While that’s a simple objective, achieving it is not easy.

As is clear from ASIC’s work over many years, the complexity of the financial system, the range of products and business models, the interconnected nature of some of those, and indeed the range of knowledge and capacity that people bring when they engage with the system, make consumer protection and financial advice a complex challenge.

Sometimes this results in very complex legislation, as I know you’re all aware of. And sometimes that is helpful. But we’re also increasingly conscious that sometimes it is not.

Complexity can often be an obstacle to compliance, and to effective regulation. In our experience, the simpler a set of rules, the more enforceable they are. That’s not just good for consumers and investors. It’s also good for businesses and professionals, who get greater clarity about what’s required of them.

And while the legislative framework is a matter for the Government, we‘re conscious that we administer a complex range of regulatory guidance and legislative instruments. With a significant amount of that focusing on the requirements that apply to people involved in the provision of financial advice.

In November last year, our Chair Joe Longo announced the creation of a Simplification Consultative Group, to advise ASIC on what we can do, within our powers, to address this issue of complexity. We will be seeking your views on this work during 2025. So if it’s an issue of interest to you, I encourage you to keep an eye out for further announcements in the coming weeks.

But returning to the topic of today’s forum, advice policy, I’d like to start by talking about ASIC’s role in policy – in general and also in relation to the advice-related reforms.

I’ll then share some reflections on what we are seeing in terms of the quality of advice.

Then I’ll finish with some notes on what you can expect to see from ASIC over the next year, given our priorities.

Policy: preparation, implementation and compliance

So, first to ASIC’s role in relation to policy.

ASIC doesn’t make policy decisions. Nor do we design regulatory reform. That’s the role of the Government, guided by advice from Treasury, with Parliament, of course, making the ultimate decision on any changes to legislation.

ASIC does, of course, assist Treasury through that process. But our role really comes into play once legislative reforms have passed, where we’ve got an important role in helping industry to understand what the new requirements mean for them, and how to comply with them. And, obviously, a key way in which we do this is through producing regulatory guidance.

The Delivering Better Financial Outcomes (DBFO) reforms provide the most recent examples of this work. As you know, and we’ve already talked about this morning, it’s being rolled out in a series of tranches. And through this process, we’ve been liaising with industry – through various professional associations, through our supervisory work and stakeholder forums, including our own Financial Adviser Consultative Panel.

Coming from that work, in October and November we released – following the passage of the first tranche – a suite of new and updated regulatory guidance and other supporting information. And we continue to seek input from stakeholders on the content of our regulatory guidance, some of which may result in further updates to that guidance. And as further reforms are legislated, we’ll continue through that process.

Similarly, with the introduction of professional standards for financial advisers, we continue to update our guidance – and we’ll no doubt be doing that further as a result of some announcements earlier today. This, to date, includes information about the impact of the reforms, timeframes for compliance and the requirements for accessing different pathways.

As reforms begin to take effect, industry participants sometimes encounter practical issues that are raised with us, often by industry groups. We’re always really keen to listen to those concerns and, where it’s appropriate and within our powers, we’re willing to consider taking action to support the intent of the relevant reforms.

As an example, following industry concerns about the practical implications of the changes to Financial Services Guide (FSG) requirements, we registered a legislative instrument late last year, which broadened the use of website disclosure. So that it can be used in relation to dealing in a financial product for the purposes of implementing financial product advice, as well as for the advice itself. And I know that was something that was welcomed by many around the industry.

Of course, once legislation is in place, we also then shift focus to monitoring compliance – and one of the key ways in which we do that is through thematic reviews.

These typically involve selecting a selection of advisers and licensees, gathering data and information to help us to assess levels of compliance with particular legislative provisions. We then publish our findings, highlighting good practices and areas for improvement to assist the sector and drive further compliance.

And a good example of this from the past year would be Report 779, which examined the role of super trustees, financial advisers and licensees in relation to choice superannuation products – which I discussed at another Conexus event late last year which I know a number of you were present at [REP 779].

Then the other key aspect of our role is, of course, enforcement. Where we see serious non-compliance – which might be something we identify through our thematic reviews, it might be through reportable situations, it might be through reports of misconduct that come directly to us from members of the public – we may refer that misconduct for investigation, which can, of course, lead to litigation by ASIC or referral to the Commonwealth Director of Public Prosecutions for potential prosecution.

We provide clear guidance to industry about our priorities, the areas of focus in our enforcement work, through annual enforcement priorities, which I’ll discuss a bit later.

ASIC’s view on the quality of advice

Before speaking about our priorities for the next year, Conexus invited me to make a few comments about what we’re seeing in terms of the quality of advice and whether it’s improved, given the reforms of recent years.

I think it’s fair to say, we’ve seen some positive indications through work that ASIC has done. That includes the work that we did on the Life Insurance Framework Review, where we saw a significant improvement in the quality of advice between 2017 and 2021.

And although the scope and findings of that work were limited to life insurance advice, some of our observations from the review and input from industry stakeholders suggest that several factors have influenced an improvement in standards of advice in parts of the industry.

They, of course, include the adviser education standards and improved focus by licensees on the best interests duty, and the adoption of some of the recommendations that we made in 2017, following a review of how large institutions were overseeing advisers [REP 515].

We also observed, in that work, that record-keeping across client advice files had materially improved. And that’s important because record-keeping helps demonstrate compliance, and it’s long been an area of focus for ASIC and will continue to be so.

Areas of concern

At the same time, however, we continue to see too many examples where advice leads to poor, if not devastating, outcomes for consumers.

Our ongoing investigation into the Shield Master Fund is one such example – though regrettably it’s not an isolated one. It reflects a pattern of conduct we are seeing all too frequently.

This pattern commonly involves telemarketers recruiting consumers before passing them onto advisers. These advisers then recommend that consumers withdraw their superannuation savings from a regulated fund and invest them, sometimes via an SMSF (self-managed super fund), into a high-risk property scheme or some other high-risk investment.

Our Deputy Chair Sarah Court has described some of this misconduct as occurring ‘at industrial scale’. And this can result in the significant erosion – or complete loss – of a person’s retirement savings. And while there is often a complex web of individuals and entities involved, inappropriate or poor-quality advice typically plays a pivotal role in the ultimate consumer outcomes.

ASIC’s priorities

Those comments are a bit of a backdrop to some of our priorities for the current year, which I’ll talk about now. I’ll talk about our strategic priorities and enforcement priorities.

We have five longer-term strategic priorities but there are two in particular that I’ll call out as having an impact on advice.

The first is to ‘improve consumer outcomes’. And this includes our work in a range of areas, such as predatory sales tactics, design and distribution obligations and dispute resolution.

And I would like to particularly highlight the work on dispute resolution. We, of course, now receive data on a six-monthly basis on firms’ internal dispute resolution. We have made it clear that we will be publishing firm-level data from that data collection during the course of 2025.

Late last year, we published a higher-level overview of what we were seeing from the initial data collection, with some observations around some of the data quality issues. And, I guess, I mention that because with firm-level publication coming, firms have got an opportunity to really focus on how to improve the quality of their data before that becomes publicly available.

The second strategic priority to highlight is ‘better retirement outcomes and member services’. And while this includes our well-publicised work on member services for members of super funds, our work in this area is not limited to super. It also includes a focus on entities and individuals involved in the provision of advice.

An important initiative in this area is our thematic review into self-managed super fund establishment advice, which is focusing on why some clients are advised to set up an SMSF.

As part of this, we’re reviewing client advice files, where SMSF establishment advice was provided, to assess compliance with the best interests duty and related obligations. We’re also reviewing information from licensees about their oversight and the application of their policies and procedures in the context of SMSF establishment advice. And I expect that we’ll release the findings from this work in the second half of this calendar year.

As I mentioned, besides our strategic priorities, we also have enforcement priorities, which are announced annually. And these target specific forms of misconduct that are of serious concern to ASIC.

Over the coming year, you can expect, through those priorities, to see a sustained focus on advice-related misconduct.

In light of some of the poor practices we’re seeing, which I’ve spoken about, the 2025 priorities include ‘misconduct exploiting superannuation savings’ and ‘unscrupulous property investment schemes’.

And I want to say, our work in this area won’t be limited to superannuation trustees or responsible entities of managed investment schemes. It will include the broad range of entities involved in conduct causing harm to consumers and investors – including advisers and licensees.

And the final thing I want to say is those enforcement priorities are set in a context in which our investment in enforcement and our appetite for taking on significant matters are increasing.

We currently have action underway against NAB, HSBC, the ASX, Harvey Norman, QBE and Rex. And that’s not to mention the trial of former directors and officers of the Star Entertainment Group, which is commencing today. The number of investigations that we commenced in the last six months of 2024 was up more than 30%, year-on-year, and some of these will flow through into future litigation and compliance action.

And I really hope that this stronger approach to enforcement is something that’s welcomed by people in this room. Because when advice goes terribly wrong, the harm that it causes to consumers can damage confidence in the entire industry.

Conclusion

That’s all I wanted to say by way of intro. Thank you to Conexus for the invitation to speak today.

As I said at the start, one of our core functions is to promote the informed participation of consumers and investors in the system.

Your clients trust you to help them make confident and informed decisions – and, in many cases, those decisions will be among the most consequential of their lives.

So, I hope that these comments give you confidence that ASIC is committed to continuing to work with you to help you to comply with the law in ways that produce good outcomes for consumers. Thank you.