Thank you for the opportunity to appear today.
I am joined today by Deputy Chair Sarah Court and Commissioners Kate O’Rourke, Alan Kirkland and Simone Constant.
Also present today are Chief Executive Officer, Greg Yanco, our General Counsel, Chris Savundra; our Executive Director of Markets, Calissa Aldridge and our Chief Financial Officer, Peter Dunlop.
Last time we appeared before this Committee in April, there was significant interest by members in relation to our enforcement activity and actions.
As at 30th April (over a 12-month period), we have:
commenced over 130 new investigations, this is an increase of around 25% on the previous year; and
filed 29 new civil proceedings in the Federal Court (against 64 defendants), representing an increase of 11% in civil proceedings on the previous year.
Investigations have led to 23 individuals charged by the CDPP for criminal offences with 16 convictions with a total $936,000 in fines ordered by the courts.
ASIC is one of the nation’s most active law enforcement agencies.
Amongst our domestic peers, I don’t think you will find a regulator in court more often than we are.
As members will be aware, court action can be costly, resource-intensive, and it can be complex. No two cases are the same.
We pursue court-based outcomes and substantial penalties when we find evidence of serious misconduct and it is in the public interest to do so.
Our enforcement outcomes are strong – our record shows that ASIC is securing materially higher penalties than it did a decade ago.
We also pursue difficult cases where the outcome is not guaranteed, but we consider it important to test the law.
Some matters can run over several years, particularly if appeals are involved.
There are two recent examples I’d like to share with the Committee which demonstrate public interest outcomes that ASIC has achieved through the courts.
Firstly, the Committee will be familiar with the final stop order we issued under the design and distribution obligations regime against Coral Coast Distributors Pty Ltd.
ASIC’s stop order prohibits Coral Coast from allowing its customers to use Centrepay to pay for items at its Urban Rampage stores.
Coral Coast has applied to the Administrative Appeals Tribunal for a review of ASIC’s decision to make a final stop order and for a stay of that order pending the hearing of this application.
We strongly defended our position.
On Wednesday, the Tribunal rejected Coral Coast’s application for a stay.
This is a positive and welcome outcome for vulnerable First Nations consumers.
Where ASIC sees conduct that places consumers at risk of financial harm, we will act to stop it.
Secondly, in late May, ASIC secured a guilty plea in its ongoing proceedings against John Bigatton, the Australian promoter of the now-collapsed investment vehicle BitConnect.
BitConnect was a financial services business and online crypto platform, which required investors to acquire a BitConnect Coin – a form of cryptocurrency token – in order to invest its investment opportunities.
In promoting this financial product, Mr Bigatton provided unlicensed financial advice in seminars around the country, as well as online via social media.
Mr Bigatton will proceed to sentencing hearing next month.
Back in September 2020, ASIC banned Mr Bigatton from providing financial services for seven years.
This work demonstrates our ongoing commitment to combatting misconduct arising from emerging technologies like cryptocurrency using the regulatory tools and legal frameworks available to us.
Both the Coral Coast and BitConnect examples highlight the complexity, time and resources involved in many of our cases.
But we run them for good reason.
We do not believe that it is in the public interest for serious contraventions to go unpunished.
ASIC’s digital transformation
Enforcement and compliance work requires investment in technology – any regulator will tell you that.
In this environment of rapid change, that technology is more important than ever.
The Financial Regulator Assessment Authority (FRAA) recommended that ASIC needed a substantial uplift in its data and technology capability.
ASIC wholeheartedly agrees with this recommendation.
ASIC is in a digital arms race, with AI rapidly being adopted in financial services firms and digitally-enabled misconduct is on the rise.
We need to be a leading digitally enabled and data-informed regulator who is ahead of the game.
To support this vision, we have developed a digital target state and we received initial funding in the recent federal budget to commence a program of work to uplift our cyber security across our regulatory systems which will set us on firm foundations for our digital uplift.
We will now move to implement these initiatives, including a new ‘threat intelligence platform’ to improve information collection and real-time detection of internal and external cyber threats.
Last year, ASIC seized and reviewed 2.6 million documents, as part of its investigations.
The time to collect, process and sift through this volume of data to find the “needle in the haystack” and make the connections with other data sets we’ve previously collected is exceedingly labour-intensive, relying heavily on manual efforts from our investigators.
Bolstering our data and analytics capabilities through investment in creating a unified view of entities, coupled with advanced analytics, would significantly expedite ASIC’s ability to connect disparate data sets, and accelerate the investigation process.
This improvement would not only aid in bringing relief to victims more swiftly, but also serve as a deterrent to potential bad actors.
Transitioning to a leading digitally enabled and data-informed regulator reduces the dependency on human intuition and experience for decision-making.
We know that utilising innovative digital and data driven approaches works.
ASIC’s innovative approach to tackling investment scams with website takedown powers, has seen us shutter about 5000 scam websites since 1 July 2023, all to help protect consumers.
This is work that has been recognised globally in the last fortnight, with ASIC to help lead a new anti-scams working group of regulators in Asia-Pacific to tackle the issue in our region.
A further uplift in data capabilities will empower ASIC to make more timely decisions regarding resource allocation and fine-tuning of priorities across prevention, investigation, and enforcement efforts.
These advancements will enable us to achieve better outcomes and bolster public trust and confidence in the Australian financial system.
Finally, in recent weeks, I have had the opportunity to discuss the priorities of financial and markets’ regulators across a range of jurisdictions.
The rise and use of AI and the proliferation and impact of digitally-enabled scams were significant areas of focus at the recent meeting of the International Organization of Securities Commissions.
So too were the growth in private markets and sustainable finance and climate disclosure reporting.
It is reassuring that the issues ASIC is focused on in Australia, are the same as our global peers.
We look forward to answering the Committee’s questions.
