ASIC – The Role of the Corporate Regulator

Government regulators for businesses have significant powers that can impact your business. Engaging with the regulator in a sensible and productive way can make the process quicker and less stressful.

Most businesses and business owners go their whole career without having to deal with an investigation by the regulator. If the regulator should come knocking on your door, some basic information about the process and tools they may use can help you respond professionally and appropriately.

A key and very active regulator is the Australian Securities and Investments Commission (‘ASIC’) which is the primary regulator for financial services in Australia. This article provides a high-level overview of the process that ASIC may adopt when an investigation involves your business.

See also our article 4 Practical Tips for Managing an ASIC Investigation for practical tips for engaging in that process. These tips can also apply to how you communicate with and respond to other regulators relevant to your business.

Changes in ASIC Activities

Since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, ASIC has been increasing its enforcement activity significantly. While the COVID-19 pandemic has slowed this enforcement activity somewhat, as Australia emerges from the impacts of the pandemic it is expected this activity will increase once again.

There are two key factors in successfully navigating an investigation by ASIC:

  1. Understand the process and tools that ASIC may use, and
  2. Seek specialist legal advice about the process and protections available to you.

Having this basic information about the process that ASIC adopts and how to navigate it will make the process less stressful and result in a better outcome.

ASIC’s Role

ASIC’s role is to:
  • Maintain, facilitate and improve the performance of the financial system and entities in it.

  • Promote confident and informed participation by investors and consumers in the financial system.

  • Administer the law effectively and with minimal procedural requirements.

  • Receive, process and store, efficiently and quickly, information we receive.

  • Make information about companies and other bodies available to the public as soon as practicable.

  • Take whatever action which is necessary, to enforce and give effect to the law.

In October 2019, ASIC adopted its ‘Why not litigate?’ policy. This means that once ASIC is satisfied breaches of the law are more likely to have occurred than not, and the facts of the case show pursuing the matter would be in the public interest, then ASIC will actively ask itself: why not litigate this matter?

While the focus of ASIC’s recent enforcement action has been primarily with the ‘big 4’ banks, it is reasonable to assume that the new policy will result in a change in mindset that will see more enforcement activity at every level, including for individual financial advisors and planners.

Sensible and strategic engagement with the regulator can reduce the length and cost of an investigation and can reduce the risk that you or your business will face in an eventual prosecution. In other words, it makes good business sense to have a productive relationship with the regulator.

How ASIC Engage

The most common ways that ASIC will seek to engage with you and your business are:

  • A request for documents
  • Interviews
  • Legal proceedings

How Can We Help

If a Regulator has come knocking on your door we recommend you seek specialist legal advice to ensure you understand the process and protections available to you.

Our Tony Peterson is a Commercial Litigation Lawyer who has considerable experience in disputes involving regulators. Contact Tony for a Free Case Evaluation today on 1300 553 343.

Commercial Litigation Lawyers for Sydney and Newcastle

Need Answers Fast? Contact Us Today

The information in this article is not legal advice and is intended to provide commentary and general information only. It should not be relied upon or used as a definitive or complete statement of the relevant law. You should obtain formal legal advice specific to your particular circumstance. Liability limited by a scheme approved under Professional Standards Legislation.

Principal Solicitor
Accredited Specialist (Commercial Litigation)