Register For Our Mailing List

Register to receive our free weekly newsletter including editorials.

Home / 100

ASIC’s outlook on risk and law enforcement

As Cuffelinks marks its 100th edition, it is an opportune time to explain to this important audience the role of ASIC as Australia's integrated corporate, markets, financial services and consumer credit regulator and law enforcer.

Making sure Australians have trust and confidence in the financial system is at the heart of everything we do. We regulate entities at every point from ‘cradle to grave’ - from their incorporation to their winding up – and also look after the interests of the consumers they serve in an increasingly digital world.

Our regulatory priorities are to:

  • promote investor and financial consumer trust and confidence, and
  • ensure fair, orderly and transparent markets.

ASIC is a law enforcement agency. We use around 70% of our regulatory resources on surveillance and enforcement. A key aspect of what we do is holding gatekeepers to account – identifying and dealing with those who break the law. Where we see non-compliance, we will act quickly and decisively through our 'detect, understand and respond' approach.

Five risk drivers

It is helpful to understand the circumstances that drive risk to investors and financial consumers. In our efforts to understand these drivers, we have identified five broad areas that are having significant impact:

First is the tension between a free market-based system and investor and financial consumer protection. This is influenced by the increasingly global economy, the compliance culture and systems of those we regulate, and the shifts in consumer sentiment and financial literacy.

Second is digital disruption. In financial services, crowdfunding and peer-to-peer lending platforms are disrupting traditional ways of accessing capital. In our markets we see digital disruption in high-frequency trading and dark liquidity. And there will be more digital disruption as we see advances in, for example, the use of mobile technology for financial transactions, increased use of ‘big data’ by financial services providers to customise their marketing.

Third is structural change. There has been a global shift towards market-based financing. In Australia this has been driven predominantly by growth in the superannuation sector. We also have an aging population. The government's recent Intergenerational Report covers that in detail.

The structure of the Australian funds management industry also continues to evolve with consolidation among the four major banks expected to continue. Financial markets too are seeing competition intensifying and affecting capital raising, secondary trading and post-trade infrastructure.

Fourth is financial innovation-driven complexity. Complex products are available to investors and financial consumers, but can be misunderstood or mis-sold.

Technology-driven financial innovation continues to change how markets interact, including with investors. The rapid pace of technological change has also brought challenges of cyber-resilience to the fore. At the same time Australians' use of information and communications technologies is high on a global scale.

Fifth, and finally, is globalisation. The global financial system has become more integrated, competitive and complex. Australia's financial markets are more integrated with international markets than ever before, and financial facilities, services and products are increasingly provided across borders.

Responding to key risks

Against this background, we have identified key risks that fall into the areas of conduct, innovation-driven complexity, globalisation and expectations gap.

We are undertaking proactive risk-based surveillance of high risk areas that will have the greatest impact on investors and financial consumers and the sectors and participants we regulate. In particular, we are concentrating on financial advisers and responsible entities operating managed investment schemes.

We also continue to undertake reactive surveillance to detect possible wrongdoing. Where there are issues, we take action without fear or favour.

ASIC's latest six-monthly enforcement report, detailing outcomes achieved between 1 July 2014 and 31 December 2014, recorded 348 enforcement outcomes. This included 204 criminal actions as well as civil and administrative (e.g. banning or disqualification) actions, and negotiated outcomes, including enforceable undertakings.

These outcomes were achieved across the financial services, market integrity, corporate governance and small business areas.

The report highlights ASIC’s ongoing focus on tackling serious corporate fraud and loan fraud and ASIC’s use of civil penalty proceedings to enforce the law.

At the same time, there are some drivers of risks that we cannot influence, and risks that we cannot address within the current regulatory settings. There may be more on this when recommendations of the recent Financial Systems Inquiry are further considered by government.

More positively, some of the risks we have identified may not crystallise.

A more detailed explanation of our work across these risk areas can be read in our Strategic Outlook on the ASIC website.

Expectations gap

Different expectations and uncertainty about outcomes in the regulatory settings can undermine confidence and behaviour.

This is magnified by uncertainty about whether the regulatory settings – established by Parliament – will be effective in more difficult economic conditions. Investors and financial consumers may also underestimate the risk they can handle when things get tougher.

We use our resources and powers to ensure that the financial system is robust and operates in the long-term best interest of Australian consumers. However, we cannot eliminate market risk, prevent all wrongdoing or ensure compensation for investors who lose money.

And finally, it is also important that the sectors and participants we regulate must look to, and act in, the long-term best interests of financial consumers to ensure that trust and confidence in the Australian financial system remains strong.

 

Peter Kell is Deputy Chairman of the Australian Securities & Investments Commission (ASIC).

 


 

Leave a Comment:

RELATED ARTICLES

ASIC is not soft: who's next in line for scrutiny?

Are there lasting benefits from changes to capital raising regulations?

We need to limit retail investor harm from CFDs

banner

Most viewed in recent weeks

16 ASX stocks to buy and hold forever, updated

This time last year, I highlighted 16 ASX stocks that investors could own indefinitely. One year on, I look at whether there should be any changes to the list of stocks as well as which companies are worth buying now. 

UniSuper’s boss flags a potential correction ahead

The CIO of Australia’s fourth largest super fund by assets, John Pearce, suggests the odds favour a flat year for markets, with the possibility of a correction of 10% or more. However, he’ll use any dip as a buying opportunity.

2025-26 super thresholds – key changes and implications

The ABS recently released figures which are used to determine key superannuation rates and thresholds that will apply from 1 July 2025. This outlines the rates and thresholds that are changing and those that aren’t.  

Is Gen X ready for retirement?

With the arrival of the new year, the first members of ‘Generation X’ turned 60, marking the start of the MTV generation’s collective journey towards retirement. Are Gen Xers and our retirement system ready for the transition?

Why the $5.4 trillion wealth transfer is a generational tragedy

The intergenerational wealth transfer, largely driven by a housing boom, exacerbates economic inequality, stifles productivity, and impedes social mobility. Solutions lie in addressing the housing problem, not taxing wealth.

What Warren Buffett isn’t saying speaks volumes

Warren Buffett's annual shareholder letter has been fixture for avid investors for decades. In his latest letter, Buffett is reticent on many key topics, but his actions rather than words are sending clear signals to investors.

Latest Updates

Investing

Designing a life, with money to spare

Are you living your life by default or by design? It strikes me that many people are doing the former and living according to others’ expectations of them, leading to poor choices including with their finances.

Investment strategies

A closer look at defensive assets for turbulent times

After the recent market slump, it's a good time to brush up on the defensive asset classes – what they are, why hold them, and how they can both deliver on your goals and increase the reliability of your desired outcomes.

Financial planning

Are lifetime income streams the answer or just the easy way out?

Lately, there's been a push by Government for lifetime income streams as a solution to retirement income challenges. We run the numbers on these products to see whether they deliver on what they promise.

Shares

Is it time to buy the Big Four banks?

The stellar run of the major ASX banks last year left many investors scratching their heads. After a recent share price pullback, has value emerged in these banks, or is it best to steer clear of them?

Investment strategies

The useful role that subordinated debt can play in your portfolio

If you’re struggling to replace the hybrid exposure in your portfolio, you’re not alone. Subordinated debt is an option, and here is a guide on what it is and how it can fit into your investment mix.

Shares

Europe is back and small caps there offer significant opportunities

Trump’s moves on tariffs, defence, and Ukraine, have awoken European Governments after a decade of lethargy. European small cap manager, Alantra Asset Management, says it could herald a new era for the continent.

Shares

Lessons from the rise and fall of founder-led companies

Founder-led companies often attract investors due to leaders' personal stakes and long-term vision. But founder presence alone does not guarantee success, and the challenge is to identify which ones will succeed in the long term.

Sponsors

Alliances

© 2025 Morningstar, Inc. All rights reserved.

Disclaimer
The data, research and opinions provided here are for information purposes; are not an offer to buy or sell a security; and are not warranted to be correct, complete or accurate. Morningstar, its affiliates, and third-party content providers are not responsible for any investment decisions, damages or losses resulting from, or related to, the data and analyses or their use. To the extent any content is general advice, it has been prepared for clients of Morningstar Australasia Pty Ltd (ABN: 95 090 665 544, AFSL: 240892), without reference to your financial objectives, situation or needs. For more information refer to our Financial Services Guide. You should consider the advice in light of these matters and if applicable, the relevant Product Disclosure Statement before making any decision to invest. Past performance does not necessarily indicate a financial product’s future performance. To obtain advice tailored to your situation, contact a professional financial adviser. Articles are current as at date of publication.
This website contains information and opinions provided by third parties. Inclusion of this information does not necessarily represent Morningstar’s positions, strategies or opinions and should not be considered an endorsement by Morningstar.