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ASIC unveils plan to protect vulnerable consumers, small businesses
The Australian Securities and Investments Commission has outlined further enforcement action it will take to protect Australian consumers and small businesses from scams, digital misconduct and predatory lending practices, including scams involving crypto-assets and artificial intelligence (AI).
ASIC chair Joe Longo on Monday released the regulator’s latest Corporate Plan, covering a period through 2027 with a focus on the 2023-4 financial year, saying it follows years of progress against strategic priorities and strong enforcement outcomes in the 2022-3 financial year.
“ASIC has made strong progress since we released our strategic priorities last year, and we still have more work to do,” ASIC chair Joe Longo said. “We are responding to key trends and emerging issues in the regulatory landscape, where there are major shifts across sustainable finance, the digital and data economy, and an ageing population.”
The plan outlines ASIC’s progress and projections on its four-year strategic priorities announced last year, which focus on product design and distribution, sustainable finance practices, retirement outcomes, and technology risks.
“The past 12 months have been challenging for many Australians, particularly vulnerable consumers and small businesses, as the impact of high inflation and rising interest rates is felt across the economy,” Longo wrote in the plan.
“Against this backdrop, we will sharpen our focus on predatory lending practices and noncompliance with new consumer protections relating to small-amount credit contracts and consumer leases. We will also take action against conduct that unfairly impacts small businesses, including in relation to unfair contract terms and supply of unsuitable products.”
Longo said ASIC is also focussing on scams involving crypto-assets and the potential harms they pose for investors, noting that it will act on relevant misconduct while supporting the development of government policy initiatives. In addition, ASIC is closely monitoring the development and use of AI, including its impact on businesses and markets, and is exploring the potential of using AI and other new technologies within ASIC.
Another key area of focus for ASIC, particularly given Australia’s ageing population, will be conduct that affects retirement outcomes, Longo said.
According to APRA’s annual superannuation statistics, around 11.8 per cent of member accounts with superannuation funds currently belong to members aged 65 and older, amounting to $551 billion in total member assets. And with 3 million members projected to become eligible to draw on their super in the next 10 years, that proportion is steadily increasing, he noted.
“We will take strong action against misleading conduct and poor governance in the superannuation sector, especially where misconduct erodes members’ balances.”
He further noted that the commission has been operating under a new structure since July, saying it “strengthens our capacity to respond to emerging threats and challenges”.
In the three years through June 2023, ASIC commenced more than 125 criminal actions, resulting in 92 criminal convictions and 39 custodial sentences, Longo noted. It also carried out nearly 200 civil actions, with more than 130 successful civil claims. In total, courts in these actions have imposed more than $500 million in criminal and civil penalties.
Focus on financial hardship
On Friday, ASIC released an open letter calling on lenders to appropriately support customers in financial hardship, citing an increasing number of customers experiencing financial distress due to cost-of-living pressures. It urged lenders, including 30 large lenders it sent the letter directly, to have appropriate arrangements to support customers.
“ASIC reminds lenders that they must have the right arrangements in place to respond to requests for assistance from customers experiencing financial hardship and to work constructively with them to find a sustainable solution,” ASIC commissioner Danielle Press said.
The letter set out expectations for lenders, including proactively communicating how customers can seek help and “genuinely considering customer circumstances to develop sustainable solutions where possible”. ASIC noted that it is also collecting data from the 30 large lenders about hardship applications and reviewing 10 large home lenders to understand how they handle financial hardship.
“ASIC expects all lenders to seriously consider the expectations outlined in our letter and to take the necessary action to ensure they fulfill their obligations in supporting their customers,” Press said.
ASIC said it expects to release findings from its review of home lenders by mid-2024.
