ASIC is tweaking its regulatory focus in 2018, which means financial institutions have even more work to do to remain compliant. Detailed in a speech made by ASIC Commissioner John Price, ASIC will be focusing on five key areas in the coming year:
1) Culture and conduct
Culture and conduct is leading to poor quality financial advice – the key target for ASIC in 2018. Price detailed ASIC’s focus on firms’ programmes for remediating consumers, particularly in the provision of non-compliance advice or fee-for-no service breaches.
Within superannuation and managed funds, ASIC will be reviewing high-risk responsible and superannuation entities, focusing on disclosure practices that affect consumers’ understanding of risks and costs of a financial product or service.
In particular, ASIC will focus on:
- Conflicts of interest for corporations.
- Retail and wholesale market misconduct.
- Accuracy and timeliness of disclosure and reporting of financial information.
2) Building financial capability
ASIC aims to improve consumers’ and investors’ knowledge of financial products. This means banks must test the quality of advice to consumers who have set up SMSFs, including compliance with the Future of Financial Advice reforms.
It’s the kind of analysis that can easily fall short of compliance if the right tools aren’t set up to capture and process data – an individual’s knowledge is not as easily measured as, say, their tax history.
3) Digital disruption and cyber resilience
While it brings untold benefits to the fintech sphere, in many cases automation is also enabling misconduct. ASIC will start to monitor cyber-enabled misconduct, as well as emerging fintech to ensure it stays within the realms of regulatory compliance.
Australia will soon go the way of Europe and the US, where substantial fines are already in place for data and cybersecurity breaches. Most recently, the company behind Hilton Hotels was fined $700,000 after over 363,000 accounts were put at risk. The Australian government has already passed legislation to amend Australia’s privacy law, making data breach notification mandatory from February 2018, and we expect to see increased fines for cyber non-compliance as a result.
The post-Brexit, Trump-dominated world has led to increased protectionism. Wanting to maintain global trade links, ASIC is increasing its cooperation with international agencies. For financial institutions, this will manifest itself in a renewed focus on cross-border market misconduct – including surveillance for fixed income, currency and commodities markets.
5) Demographic change
As the Australian population ages, new challenges are presented due to the increased complexity of retirement planning and the higher risk that an elderly population will be victims of poor advice. To address this, ASIC has established a special working group to ensure the needs of older Australians are met. Again, the focus here will be on the quality of financial advice.
Price spoke of data and the key role it has to play in addressing all of the above, particularly in the realm of financial advice. If ASIC is using data to identify poor advice, so too should financial institutions. Frisk’s data retrieval service has already helped countless financial institutions to improve their risk and compliance, by allowing real-time monitoring of financial advice.
When it comes to meeting ASIC’s risk and compliance requirements in 2018, the solution is simple – choose Frisk.