08 November 2022
ASIC 2023 Priority Actions
In his recent address to the Committee for Economic Development of Australia (CEDA), the chairman of Australian corporate regulator ASIC (the Australian Securities & Investments Commission), Joseph Longo, has outlined the regulator’s strategic priorities for the next four years and its plan of action for 2023. This follows the release of ASIC’s Corporate Plan (ASIC Corporate Plan 2022–26: Focus 2022–26) on 22 August 2022.
One of ASIC’s four strategic priorities for the years ahead is related to technology risks, focusing on the impacts of technology in financial markets and services, driving good cyber-risk and operational resilience practices, and acting to address digitally enabled misconduct, including scams. In terms of action taken to advance this priority, ASIC will be addressing market integrity issues and investor harms in relation to crypto-assets (or cryptocurrency) as well as disrupting and combatting financial scams to protect consumers.
Cryptocurrency
In his address to CEDA, the Chair cited unsettling research on crypto-currency investors, particularly since the onset of the pandemic, in driving home the very significant risks associated with the asset. The high volatility, riskiness and complexity of the asset were flagged in warning consumers about investing in cryptocurrency. The Chair was explicit in stating his concern that investors do not fully understand what they’re investing in, with this statement further supported by the earlier cited research revealing that as many as 80% of the surveyed investors did not consider crypto-assets risky. ASIC stated it will continue to prioritise this area over the next 12 months and beyond. The three cornerstones of ASIC’s crypto regulatory strategy include:
- supporting the development of an effective regulatory framework and greater regulatory clarity for this class of products.
- continuing to take enforcement action to disrupt and deter harmful products already within ASIC’s jurisdiction, including those that mimic traditional products or seek to circumvent regulation.
- collaborating and cooperating with domestic and international peers, stating that coordinated action and standard setting is important because the crypto ecosystem does not observe borders or the jurisdiction of any single Australian regulator.
Investment Scams
In additional to the advent of cryptocurrency, investment scams are another area of concern for the ASIC in its efforts to protect people participating in the financial system. As the number of scams continue to rise and the techniques used in developing the scams become increasingly sophisticated, a greater risk is presented to the financial system. In his address the Chair spoke of the record amount of money lost to scams in Australia in 2021 – more than $2 billion dollars. Investment scams, - the ASIC’s focus - were the highest loss category, at more than $700 million dollars.
ASIC’s strategy is to disrupt the operation of scammers, using innovative, data-driven approaches to drive early intervention and, where possible, prevent loss to consumers in the first place. However, according to ASIC, this is a challenge that cannot be confronted alone. ASIC cited corporate allies as key to scam-proofing Australia with financial institutions being right in the middle of this issue, commenting on some of the work ASIC has ongoing with several banks regarding their scam detection systems. ASIC notes that coordinating their response to scams with industry, other regulators and consumers is critical to protecting people from further losses and preserving the integrity of financial markets.
ASIC address to CEDA can be found here: Looking ahead: ASIC’s priorities | ASIC - Australian Securities and Investments Commission
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