19 October 2016
Media Release - #2016095, 2016

In the role of: Minister for Revenue and Financial Services [19 July 2016 - 28 August 2018]

ASIC Enforcement Review Taskforce

As announced last week, in keeping with the Government's commitment to better protect Australian consumers by strengthening the Australian Securities and Investments Commission (ASIC), the Minister for Revenue and Financial Services, the Hon Kelly O'Dwyer MP, has today released the taskforce members and the terms of reference for the ASIC Enforcement Review Taskforce.

"The taskforce will assess the suitability of the existing regulatory tools available to ASIC to perform its functions adequately, whether there is a need to strengthen ASIC's enforcement toolkit and if so, what that might look like," Minister O'Dwyer said.

The terms of reference allow for a thorough but targeted examination of the adequacy of ASIC's enforcement regime, including in relation to industry Codes of Conduct, to deter misconduct and foster consumer confidence in the financial system.

The taskforce will be led by a core Panel chaired by Treasury, and will include ASIC, the Attorney-General's Department (AGD) and the office of the Commonwealth Director of Public Prosecutions (CDPP). Senior representatives from those agencies will include:

  • Ms Kate Mills, Principal Adviser, Financial System Division, Treasury
  • Mr Tim Mullaly, Senior Executive Leader, Financial Services Enforcement team, ASIC
  • Ms Brooke Hartigan, Director, Criminal Law Section, AGD
  • Mr Shane Kirne, Deputy Director, CDPP.

The taskforce will be supported by an Expert Group drawn from peak industry bodies, consumer groups and academia recognised for their expertise in corporations, consumer, financial and credit law. The Expert Group will provide ongoing advice and feedback to the Panel in preparing its report and recommendations. I am pleased to confirm the following members:

  • Mr Gerard Brody, CEO, Consumer Action Law Centre
  • Mr Stuart Clark, President, Law Council of Australia
  • Mr Ross Freeman, Partner, Minter Ellison
  • Professor Pamela Hanrahan, University of New South Wales
  • Professor Dimity Kingsford Smith, University of New South Wales
  • Professor Ian Ramsay, University of Melbourne.

"There will also be a Reference Group consisting of a range of stakeholders including other domestic and international regulators, from which the Panel may seek input," Minister O'Dwyer said.

"The taskforce will report to the Government in 2017 with specific recommendations on whether and what reforms should be progressed to best enhance ASIC's enforcement regime.

"The Government is committed to ensuring that ASIC has the powers it needs to protect consumers and perform its functions as Australia's corporate, markets and financial services regulator.

"The review builds on the Government's response to the Financial System Inquiry which sets out a suite of policies to improve Australia's financial system.

"The Turnbull Government committed to accelerate the implementation of the review as part of its response to the ASIC Capability Review."

Terms of Reference

The Taskforce will review the enforcement regime of the Australian Securities and Investments Commission (ASIC), to assess the suitability of the existing regulatory tools available to it to perform its functions adequately.

The review will include an examination of legislation dealing with corporations, financial services, credit and insurance as to:

  • The adequacy of civil and criminal penalties for serious contraventions relating to the financial system (including corporate fraud);
  • The need for alternative enforcement mechanisms, including the use of infringement notices in relation to less serious contraventions, and the possibility of utilising peer disciplinary review panels (akin to the existing Markets Disciplinary Panel) in relation to financial services and credit businesses generally;
  • The adequacy of existing penalties for serious contraventions, including disgorgement of profits;
  • The adequacy of enforcement related financial services and credit licensing powers;
  • The adequacy of ASIC's power to ban offenders from occupying company offices following the commission of, or involvement in, serious contraventions where appropriate;
  • The adequacy of ASIC's information gathering powers and whether there is a need to amend legislation to enable ASIC to utilise the fruits of telephone interception warrants or to grant the equivalent of Federal Crimes Act search warrant powers under ASIC's enabling legislation for market misconduct or other serious offences;
  • The adequacy of ASIC's powers in respect of licensing of financial services and credit providers, including the threshold for granting or refusing to grant a license, the circumstances in which ASIC may vary, suspend, or cancel licenses; and its coercive powers (including whether there is a need for ASIC to have a power to direct licensees to take, or refrain from taking, particular action);
  • The adequacy of the frameworks for notifying ASIC of breaches of law, including the triggers for the obligation to notify; the time in which notification is required to be made; and whether the obligation to notify breaches should be expanded to a general obligation (currently confined under the Corporations Act to auditors, liquidators, and licensees, and noting that obligations to report offences exist under other Federal or State statutes); and
  • Any other matters, which arise during the course of the Taskforce's review of the above, which appear necessary to address any deficiencies in ASIC's regulatory toolset.

Upon completion of the Review, the Taskforce will identify any gaps in ASIC's powers and make recommendations to the Government which it considers necessary to strengthen any of ASIC's regulatory tools and as to the policy options available that:

  1. address gaps or deficiencies identified in a way that allows more effective enforcement of the regulatory regime;
  2. foster consumer confidence in the financial system and enhance ASIC's ability to prevent harm effectively;
  3. do not impose undue regulatory burden on business, and promote engagement and cooperation between ASIC and its regulated population;
  4. promote a competitive and stable financial system that contributes to Australia's productivity growth; and
  5. relate to other matters that fall within this Terms of Reference.