ASIC releases its Corporate Plan for 2024-2025

What you need to know

On 22 August 2024 ASIC released its Corporate Plan for 2024-2025 outlining its strategic priorities for the next four years (2024 to 2028).

ASIC's plan over that period covers five strategic priorities:

• improving consumer outcomes;
• addressing financial system climate change risk;
• bettering retirement outcomes and member services;
• advancing digital and data resilience and safety; and
• driving consistency and transparency across markets and products.

Alongside these strategic priorities, ASIC will undertake a range of key activities and focus on three operational capabilities:

• digital technology and data;
• staff culture, capabilities and capacity; and
• stabilising and uplifting the ASIC business registers.

Consumer outcomes

ASIC is expecting improved consumer outcomes to be delivered as a result of a number of activities.

Taking regulatory action

ASIC is expecting to take action against firms that:

• target vulnerable customers, including those involved in predatory lending, the provision of high cost credit and conduct by unlicensed or 'fringe' entities;
• offer high risk financial products in the over the counter and exchange markets;
• engage in systemic non compliance that results in widespread consumer harm;
• have in place poor product design and distribution practice or have harmful product design and distribution practices, including conduct that results in consumers receiving unsuitable products (particularly in relation to life insurance products);
• engage in car financing misconduct, especially misconduct that affects vulnerable customers and First Nations peoples (this will include working closely with the ACCC and other regulators).

Keeping a close eye on the industry

ASIC will monitor and examine in respect of:

• the adequacy of internal dispute resolution arrangements (as outlined in RG 271 Internal dispute resolution) to check whether licensees have fair and efficient dispute resolution processes in place, and identify areas where licensees need to improve;
• compliance with the small amount credit contract and consumer lease requirements that commenced in June 2023;
• compliance practices of debt management firms, including a targeted review of policies, practices and procedures of high risk debt management firms;
• general insurers' improvements to claims handling;
• direct sales of life insurance products, with a focus on low value products.

Sharing data and observations

To help industry understand what ASIC is seeing across the industry and how industry participants can lift their game, ASIC will share data and observations in respect of:

• internal dispute resolution data (observations from the first year of IDR data reported by all firms will be published in 2024 with firm level data to be published in 2025);
• direct sales of life insurance products (which will involve engaging with identified entities to help drive behavioural change).

Being part of the conversation

ASIC will engage in:

• the independent review of the 2020 General Insurance Code of Practice; and
• the progress of the Delivering Better Financial Outcomes (DBFO) law reform package, the Australian Government's response to the Quality of Advice Review.
• Engaging in reviews, including in respect of:
  • the independent review of the 2020 General Insurance Code of Practice; and
  • the progress of the Delivering Better Financial Outcomes (DBFO) law reform. This will include providing guidance, making legislative instruments and other relevant ASIC documents.

Addressing financial system climate change risk

ASIC will support market integrity and protect consumers and investors, with a focus on the following:

• Supporting the introduction of mandatory climate related financial disclosure for large Australian businesses and financial institutions, and engaging with key stakeholders domestically through the Council of Financial Regulators Climate Working Group and internationally through the International Organization of Securities Commissions. ASIC intends to establish a new team that will develop regulatory guidance, assess applications for relief and supervise compliance with the new obligations.
• Examining how general insurers are handling customer complaints and responding to recommendations from previous reviews about their handling of claims following severe weather events.
• Deterring greenwashing and sustainable finance misconduct by undertaking ongoing surveillance activity and taking enforcement action, where necessary.
• Supporting fair and efficient carbon markets and products through effective licensing and supervision, including updating policy, and monitoring new and established markets for, carbon related financial products.

Bettering retirement outcomes and member services

ASIC will support better outcomes for consumers planning for and in retirement, with a focus on:

• Taking targeted enforcement action against cold calling superannuation switching models that result in the inappropriate erosion of superannuation.
• Taking action to target misconduct in the superannuation sector, with a particular focus on member experience, including superannuation trustees' provision of services to members and harms arising from complaints handling and claims handling.
• Reviewing member services (as part of ASIC's multi year project reviewing industry compliance with laws relevant to contact centres and trustee administration practices). ASIC will publish the findings from the review of member services to drive improvement in industry behaviour.
• Reviewing SMSF establishment advice, including conducting surveillance of personal advice provided to retail clients about the establishment of SMSFs, and the quality of advice by financial advisers and the role of financial services licensees.
• Driving industry progress towards improving retirement outcomes, including by monitoring trustees' implementation of the retirement income covenant and taking regulatory action where ASIC identifies poor conduct or practices.

Advancing digital and data resilience and safety

ASIC will manage and minimise technology, cyber and data related risks, with a focus on:

• Supporting regulated entities in enhancing cyber resilience, including by reviewing cyber resilience in various industries and sending letters based on findings. ASIC will also work on information-sharing initiatives, design a single reporting portal and partner with APRA for supervisory efforts.
• Monitoring how retail financial services and credit entities use AI and advanced data analytics, and assess risk management and governance processes. ASIC will also contribute to the Australian Government's development of AI specific regulation.
• Monitoring the how investment managers and financial advisers manage the risks of using offshore service providers, including in relation to technology, data sharing and privacy.
• Holding ASX to account on the safe and efficient implementation of the CHESS replacement program with the view of ensuring that all regulatory requirements continue to be met. ASIC will also oversee planned refreshes of the ASX Trade and ASX 24 trading systems, and upgrades to ASX's derivatives clearing platforms.

Driving consistency and transparency across markets and products

ASIC will drive to strengthen integrity across markets with a focus on:

• Examining changes in public and private markets, including the significant growth of private markets and the implications for the integrity and efficiency of public markets.
• Supervising the conduct of financial market infrastructure providers.
• Creating a central coordination function to monitor and engage entities on digital assets, tokenisation and decentralised finance.
• Enhancing monitoring and reporting on market cleanliness and expanding beyond equity markets.
• Providing guidance and engaging with stakeholders to ensure the smooth implementation of the ASIC Derivative Transaction Rules (Reporting) 2024 (which commence in October 2024).
• Creating clearing and settlement service rules to support ASX in fostering competition for clearing and/or settlement.
• Carrying out surveillance of financial reports of listed entities, unlisted entities that are of public interest, previously grandfathered large proprietary companies and superannuation funds. This will also involve a review of audit firms' adherence to ethical and independence standards.

Other key activities

Alongside its strategic priorities ASIC will undertake a range of other key activities:

• Implementing the Financial Accountability Regime;
• Ensuring the objectives of the reportable situations regime are met;
• Implementing the Compensation Scheme of Last Resort;
• Targeting gatekeeper misconduct;
• Acting against non-lodgement of financial reports;
• Acting against misconduct that impacts small businesses;
• Contributing to the development of the beneficial ownership regime;
• Focusing on better outcomes from reports from registered liquidators;
• Focusing on poor behaviours by registered liquidators;
• Contributing to the development of a licensing regime for payments providers;
• Contributing to the development of a licensing regime for buy now pay later providers; and
• The Regulatory Initiatives Grid.

Operational capabilities

ASIC will focus on three operational capabilities to improve its effectiveness and efficiency as a regulator:

• digital technology and data;
• staff culture, capabilities and capacity; and
• stabilising and uplifting the ASIC business registers.

ASIC's complete Corporate Plan for 2024-2025 can be accessed via its website.