2. Current issues in financial services regulation

Background and overview

2.1The House Economics Committee’s inquiries into ASIC’s 2021, 2022 and 2023 annual reports coincided with several other inquiries into ASIC’s effectiveness as a regulator, and into corporate and financial services law in Australia generally. Key findings from these other inquiries informed the Committee’s questioning.

2.2The Financial Regulator Assessment Authority (FRAA) was established following the Hayne Royal Commission. Its July 2022 report on the Effectiveness and Capability Review of the Australian Securities and Investments Commission noted that ASIC’s remit has broadened over the years, and ‘is now one of the broadest of comparable regulators globally.’ The FRAA found ASIC was ‘generally effective and capable’ across the areas reviewed—namely strategic prioritisation, planning and decision-making, and surveillance and licensing—but recommended improvements to ASIC’s use of technology, culture, stakeholder engagement, performance measurement and employee skill mix.[1]

2.3In January 2024, the Australian Law Reform Commission released its report Confronting Complexity: Reforming Corporations and Financial Services Legislation. This was the final report for the Commission’s Inquiry into the Legislative Framework for Corporations and Financial Services Regulation. The report said relevant laws and regulations were ‘labyrinthine’[2], and identified numerous problems with the operation and clarity of the Corporations Act, the ASIC Actand associated regulations.

2.4The Senate Standing Committee on Economics released the final report for its Inquiry into Australian Securities and Investments Commission investigation and enforcement in July 2024. That committee concluded that:

• ASIC’s broad remit is an ‘insurmountable’ obstacle to effective enforcement
• ASIC takes ‘no further action’ in response to the overwhelming majority of reports of misconduct
• ASIC pursues very few court actions, and under-utilises other enforcement tools
• ASIC is ‘inwardly focused and distracted’ from its core business by ‘well-publicised shortcomings in its governance arrangements’.[3]
  5. During the House Economic Committee’s inquiries into ASIC’s 2021, 2022 and 2023 annual reports inquiries, Committee questioning addressed many of the above themes—particularly ASIC’s enforcement practices.
  6. The remainder of this chapter summarises discussion at the public hearings, which covered the following topics:
• ASIC’s enforcement approach and its limitations
• how ASIC measures and reports on its own performance, including whether the activity-based performance metrics in its annual reports are adequate
• ASIC’s recent actions under the new DDOs and associated step-in powers to block poorly targeted financial products
• ASIC’s recent work on other key issues and industries, namely:

• ASIC’s pursuit of major insurers for breaking pricing promises
• warnings about board and director responsibilities for cyber security and data resilience, in the wake of the high-profile Optus data breach
• ASIC’s work countering corporate ‘greenwashing’
• other topics, including ASIC’s response to the ASX’s bungled settlement system upgrade.

ASIC’s enforcement practices

2.7The House Economic Committee closely monitored the progress of the concurrent Senate inquiry into ASIC investigations and enforcement. That inquiry’s final report observed that ASIC’s approach to investigation and enforcement has been ‘continually criticised over many years’—including in a 2014 Senate inquiry and the Hayne Royal Commission—and that:

While ASIC tries to deflect criticism that it is a weak corporate regulator by promoting its recent enforcement actions, the reality remains that corporate law is underenforced in Australia. ASIC’s response to most reports of alleged misconduct is to take no further action and only a fraction of reports are investigated. For the matters where ASIC proceeds to take enforcement action, the civil penalties imposed are often at odds with the scale of the offending, and few criminal sanctions are achieved. Further, ASIC’s investigation and enforcement decisions are opaque and difficult to scrutinise.

Evidence to this inquiry has made clear the deep flaws in ASIC’s approach to investigation and enforcement. Too often, ASIC fails to respond to early warnings of corporate misconduct and does not routinely use the full extent of its powers to achieve strong enforcement outcomes. This approach fails to deliver justice to the victims of corporate crimes, undermines economic productivity and does not deter future poor behaviour.[4]

2.8Responding to such criticism of its enforcement practices, ASIC told the House Economics Committee that it had to triage thousands of complaints annually based on limited resources. It highlighted data and technology reforms that would better enable ASIC to monitor key markets for misconduct, and to intervene more proactively. ASIC also explained the pros and cons of different enforcement approaches, and its current preference for litigation over court enforceable undertakings.

10,000 public complaints per year: the triaging challenge

2.9In opening comments at the 2022 hearing, ASIC summarised its triaging challenge:

…reports of misconduct from the public, usually number around 10,000 each year. We triage and prioritise these reports using criteria informed by our strategic priorities and other matters to select those that will be subject to further consideration. Given ASIC's finite resources, choices always have to be made about which of the many matters drawn to our attention can be pursued. Our challenge is to allocate our resources for maximum public benefit to consumers as well as more broadly ensuring the proper conduct of markets and industry.[5]

2.10ASIC also noted that many reports from the public fell outside its regulatory remit:

They're not all tip-offs of the highest order. A lot of the time they're people who just want help because they don't know who to speak to and they don't know what they should do; they just need help. A perfect example happens in financial advice all the time. People just say, 'I think I've got really bad advice. What do I do?' Generally, in those matters, which make up a big volume of what comes to us, we send them to the Australian Financial Complaints Authority—the ombudsman scheme—because that's where it should go.[6]

2.11ASIC told the Committee that recent changes to the reportable situations regime[7] would steadily increase its triaging task:

…with the recent change to what used to be known as breach reporting but is now referred to as reportable situations, we are going to receive ever-increasing numbers of reports for us to work through. So a very important part of our job is the triage process as those complaints and reports come through. We filter those matters through a range of different factors…some of which include the particular surveillance and enforcement priorities that we have adopted in a particular year.[8]

2.12At the October 2024 hearing, ASIC reiterated the need to prioritise cases. It said it was continuing to work on its engagement with reporters of misconduct, but ‘we are simply not resourced to have continuing engagement at a high level with people that refer matters to us.’ Responding to Committee concerns about this lack of responsiveness, it stressed that: ‘We simply do not act—much as we would like to be resourced to do so and would like to do so—in relation to individual complaints.’[9]

2.13ASIC said it had tried to improve its communication on this front to improve transparency, and to help guide people to places where they could pursue individual matters. However, it repeated:

…I don't think we're ever going to get to a situation where, when people raise individual reports of concerns about conduct by a particular director or a particular company, we are going to analyse, assess and take some form of action in relation to each and every one of those complaints, much as we would like to.[10]

Improving ASIC’s data-gathering rights and capabilities

2.14ASIC told the Committee it was investing in its data capabilities to ‘beef up’ its monitoring and early detection capabilities.[11] It said this would improve its ability to step in to address misconduct before retrospective sources of evidence—such as complaints data—caught up with the facts on the ground.

2.15However, ASIC also stressed that expanded data-gathering rights would help it to spot misconduct earlier and in more sectors. ASIC noted that its past high-profile stop orders—including against the Sterling Income Trust in 2017[12]—were ‘quite difficult’ to pursue due to ASIC’s limited data rights for the relevant sector:

To do the work that we did for those original seven stop orders was quite difficult. We don't have recurrent data rights, when it comes to management investment schemes, so we're not spotting the Sterlings early enough.

That's a real game changer for us, because…[i]f you want be a smart conduct regulator that can get in there before the reportable situations—everything else we have is a lag indicator. When you think about where we're getting all the new data now, it's reportable situations, complaints, internal dispute resolution, complaints with AFCA, external dispute resolutions. All of that tells us the consumer experience and what we'll get from DDO will tell us consumer experience as well, but they're still all either just after time or late in time. Where in the markets area we have live data and we can see things happening live and we can step in and disrupt, we can't do it in all the other areas because we don't have recurrent data.[13]

2.16ASIC said it welcomed the recommendation in the Committee’s Inquiry into insurers’ responses to 2022 major flood claims that ASIC receive recurrent data collection powers for the insurance industry, in order to address insurer misconduct. ASIC noted that this recommendation was ‘something that ASIC has called for over time’.[14]

Choice of enforcement tools

2.17The Committee heard that once ASIC has decided to pursue a matter, various enforcement tools are available, depending on the severity of the misconduct and the damage to consumers:

Do we institute civil penalty proceedings? Do we accept an enforceable undertaking? Do we issue an infringement notice? There are things like the harm to consumers or investors, the size of the entity engaging in the conduct, whether vulnerable consumers have been particularly impacted by the misconduct, the likelihood of it becoming an emerging industry-wide issue that we need to act on and be seen to be acting on quickly. … When matters come up to the committee with recommendations from the investigators, we work through and think about those various issues. We ask: Is this conduct so egregious that it should be dealt with on a criminal basis and referred to the CDPP [Commonwealth Director of Public Prosecutions] for a prosecution of the individuals involved? Should it or go to a civil penalty proceeding in a Federal Court or Supreme Court? Is an enforceable undertaking the right outcome here? … Then we have the option of infringement notices, referring matters to ASIC delegates for banning, for example, so someone can no longer provide financial advice. So there are a full suite of enforcement or regulatory tools available, and part of the job of the regulator is to turn our minds and use our discretion to decide what the right enforcement response is in the face of particular misconduct.[15]

2.18ASIC told the Committee that it has broad discretion in its choice of enforcement pathways, for example litigation versus enforceable undertakings, or other mechanisms. ASIC said the Statement of Expectations by the Treasurer does not direct ASIC as to how to pursue enforcement.[16]

2.19The Committee asked about the effectiveness of litigation compared with enforceable undertakings. ASIC’s Regulatory Guide 100 explains that court enforceable undertakings are negotiated agreements between ASIC and a counter-party that specify remedial actions for breaches of the law, which can later be enforced by the courts.

2.20For example, an enforceable undertaking may specify that ‘The party will refrain from taking part in the management of specified corporations for a specific period of time’ or ‘The party will remedy deficiencies in the company’s compliance systems... [and] take specified action and have this reviewed by an auditor or expert’. The Regulatory Guide further explains that enforceable undertakings usually require an admission of law-breaking commensurate with the severity of the breach, and that ASIC can seek court orders to enforce the actions agreed in the undertaking.[17]

2.21ASIC noted past criticisms of its use of enforceable undertakings during the Royal Commission, and its current preference for litigation:

Coming out of the royal commission…I think it's fair to say that enforceable undertakings were not favoured. They were not regarded as an effective approach, and that was linked to a view that ASIC should litigate more, should enforce the law more and not rely on deals, if I can put it that way. …

We are actually a very active litigator…we're in court somewhere in the country every day of the week. We're very often in superior courts. We're regularly in the Federal Court, supreme courts and magistrates courts.[18]

Headline case: Macquarie Bank

2.22The Committee asked ASIC about a recent headline enforcement action against Macquarie Bank. In September 2024, ASIC fined Macquarie a record $4.995million for ‘serious market gatekeeper failure’ after it failed to stop clients from placing ‘suspicious orders’ on the electricity futures market using Macquarie’s trading platform.[19]

2.23ASIC stepped the Committee through the findings of its Markets Disciplinary Panel against Macquarie, which led that panel to conclude Macquarie had shown a ‘reckless and poor attitude to compliance’:

We found that, on over 50 occasions between January and September 2022, Macquarie breached market integrity rules by permitting three of its clients to place suspicious orders. Each order displayed the characteristics of an intention to mark the close, meaning each order was placed within the last minute of the market closing, impacting the daily settlement price. In some instances, those orders were placed in the last seconds of the day. Now, marking the close…has the effect or potential impact of manipulating market prices. So we suspected that each of the 50 orders was submitted with the intention of creating a false or misleading appearance in the market. …

It was how Macquarie handled the matter that was…of most concern. … One critical fact here is that Macquarie failed to adequately react to concerns raised by ASIC. Over that period of time, ASIC officers repeatedly drew to Macquarie's attention ASIC's concerns about the suspicious nature of this activity and that something should be done about it.

… In the responses we got…there were acknowledgements, but then there was no action. … So here you've got the regulator saying to Macquarie, 'These transactions are very suspicious; you should be looking at them very closely,' and they didn't. So that's the second factor. The third circumstance raised by the panel was a concern about the effectiveness of Macquarie's compliance and surveillance staff and whether they had the specific training and skills to adequately monitor the electricity futures market. That's quite a serious thing. So you have the regulator repeatedly bringing these issues to the attention of Macquarie and then Macquarie not having the capability to actually deal with them in a timely manner and address the issues underlying the concern.

Finally…the decision of Macquarie to not implement an interim solution to cover the period in which its trade surveillance system was deficient due to it being too resource intensive was, in all the circumstances, demonstrative of a reckless and poor attitude to compliance. So this is a very disappointing incident.[20]

2.24ASIC stressed that the incident was particularly grave because of Macquarie’s dominant position in electricity futures trading:

It is the biggest player in that market. So it's not just a question of how Macquarie benefited on these particular trades; it's the fact that, when you step back, it dominates that market and, by not taking proper steps on these trades, it's encouraging, or at least enabling, clients to put on orders that could have a manipulative effect.[21]

2.25Asked whether more severe penalties were considered, ASIC advised that the incident was ‘not of a nature that would support … a suspension’ of all trading via Macquarie’s platform—noting that the trades were made by clients rather than Macquarie itself. However, ASIC warned that ‘if this were to happen again’, a suspension ‘would have to be on the table’.[22]

Headline case: Keystone Asset Management/Shield Fund

2.26The Committee also sought an update on ASIC’s actions against Keystone Asset Management, the responsible entity for the Shield Master Fund. ASIC froze Keystone’s assets in 2024 while investigating alleged misleading advice, undisclosed conflicts of interest and other risks. ASIC told the Committee that Macquarie was also caught up in this probe, since it offered the Shield fund through its superannuation plan and online trading portal.[23] ASIC explained:

We commenced surveillance and, subsequently, a formal investigation of…Keystone Asset Management, which is the responsible entity for the Shield Master Fund…in November 2023. … [O]ur concern here is that there are a large number of consumers who have invested significant funds in the Shield Master Fund. We had some concerns about how those moneys were being treated and whether there was any conduct of concern that we needed to take action in relation to. These are effectively people's superannuation investments…

We took court action against Keystone Asset Management in June of this year, seeking freezing orders to preserve the moneys that were in that fund. As a result of that court action, there have been receivers and managers and, subsequently, voluntary administrators appointed to Keystone. … We are continuing to look at the conduct and, in addition to that, the individuals involved in that conduct.

The link through to Macquarie is that the consumers who invested their superannuation moneys did so through two superannuation platforms, one of which was hosted by Macquarie and the second of which was hosted by Equity Trustees. We are, again, looking at whether or not there is any conduct of concern by either Macquarie or Equity Trustees in relation to the facilitation of those very significant investment sums through their platforms.[24]

2.27Asked about the likely timing of this process, ASIC warned that it was a very complex investigation, spanning ‘cold-calling of consumers by lead generators through to financial advice, potential mismanagement of investment funds, and the potential role of the superannuation platform host’. However, ASIC said it was hopeful of greater clarity by mid-2025.[25]

Measuring performance

2.28The Committee asked ASIC how it measures its own success. Committee members noted that ASIC’s annual reports include many activity-based metrics, but few explicit targets. ASIC responded that measuring enforcement outcomes is challenging, and that identifying appropriate target metrics was harder for a regulator than for an ordinary business.[26]

2.29On a qualitative level, ASIC Chair Mr Joe Longo highlighted that a ‘fundamental’ criterion for assessing success was the question ‘have we identified the right problems or issues to deal with? … The last thing you want, for example, is for anyone to say, “Why did you run that case? No-one cares about that issue,” or, “Why are you putting resources into that problem?”’[27]

2.30Asked about more quantitative performance targets, ASIC suggested that any such target would inevitably be disrupted by new events.[28] Pressed by the Committee—which suggested that all businesses share this problem and still manage to set measurable performance goals—Mr Longo countered:

As for the question of targets for a law enforcement agency, it's not like running a business. I don't think there's a clear parallel. … Another way of thinking about it…is that we're resourced to do between 150 and 200 investigations a year. And so, if we were to talk about targets, I would want to be getting through that many every year. The question is how many of those investigations convert into action. The action might be court action or it might be referrals to the DPP; there might be a range of outcomes. But it would be a poor indicator, it seems to me, if we undertook, say, 200 investigations last year and only a handful of them led anywhere. That would be indicative of what we're investigating—we might be investigating the wrong things…not investigating matters that are actually going to lead anywhere.

So, in terms of targets and KPIs [key performance indicators], we do look for that. Are we completing investigations within a reasonable time? Are we making good decisions about the scope of that investigation, and is it leading to real outcomes? You'll see from the annual report that we try to report on a range of that kind of data.[29]

2.31ASIC also noted specific service level criteria for its management of business registers.[30]

2.32ASIC added that the FRAA had also grappled with the question of how to measure ASIC’s performance, and that ‘it is a work in progress about what kinds of metrics are appropriate.’[31]

2.33ASIC identified its own priorities for performance improvement—and where it believed it was making progress—as technology and data uplift, improving its interactions and communication with people who report misconduct, and improving its liaison with industry and consumer groups and professional associations.[32]

Design and distribution obligations, and stop orders

2.34The DDOs commenced on 5 October 2021. They require firms ‘to design financial products to meet the needs of consumers and to distribute their products in a more targeted manner’,[33] for example to ensure products are appropriate to customers’ financial literacy, vulnerability and risk profiles. ASIC told the Committee the new regime was ‘game-changing regulatory reform’ involving a ‘consumer centric series of obligations’ designed to ensure consumers and investors are ‘being sold something that they’re supposed to be sold’.[34]

2.35Now incorporated into the Corporations Act, the DDOs require an issuer of a financial product to consider the design of its product and to determine an appropriate target market for the product.[35] Under the regime, if an appropriate target market cannot be identified for a product, an issuer is not able to offer the product.[36]

2.36ASIC is the regulator responsible for ensuring compliance with the regime. It summarised the DDOs as follows:

In short, it basically says you have to design a financial product that meets the needs of consumers who are in a target market. You need to make sure that target market is well defined, and you make sure that that product gets to them. It's not just a set-and-forget exercise either; you have to follow through the life cycle of the product. The areas that we're focusing on there—to give you a sense of some of the areas we have concerns about, some are buy now, pay later; credit cards; small amount credit providers; managed funds, which I will come back to in a moment; crypto; and super. That's where we're looking at rolling out and embedding the use of design and distribution obligations, and it's been up and running for a year now, so we're in compliance mode. We're out there at the moment, disrupting.[37]

2.37ASIC told the Committee the DDOs would help prevent a repeat of recent high-profile cases of misconduct against vulnerable customers. It noted the recent collapse of the Youpla Group (formerly the Aboriginal Community Benefit Fund), which sold funeral insurance products primarily marketed to First Nations people. In March 2022, the Youpla Group went into liquidation, leaving thousands of mainly low-income families unable to pay for funerals.[38] ASIC commented that with the DDOs and additional powers implemented since the Royal Commission, ASIC was better equipped to prevent similar harms to consumers in future:

…I think the Youpla Group is a good example or where we were very frustrated before when we had an entity that was clearly focused on working within a very complex regulatory system… changing products to get through exemptions under the laws. There were lots of gaps. Those gaps took a long time—over two decades—to fix. Now we have most of those gaps filled. We've got the product intervention powers. We've got design and distribution obligations…. There are lots of things we could do today with regard to the egregious conduct around ACBF to disrupt more decisively and more quickly.[39]

2.38The Committee asked ASIC about its work enforcing the new DDOs. At the 2022 public hearing, the DDOs had been in place for 12 months. ASIC told the Committee that at that stage, it was predominantly monitoring compliance with target market determinations (TMDs).[40] ASIC advised:

…where you see us doing surveillance activities around TMDs it's areas where we already have concerns, where we think there are poor products or products being targeted at vulnerable consumers or those we wouldn't consider they would be appropriate for…it does become very nuanced… For example, for a crypto-asset with one underlying crypto product, what level of diversification should somebody expect...These are the sorts of questions that come up in TMDs. From our perspective, we're going in on risk based targeting when we're looking at these things and whether or not we think the TMD is materially inappropriate and harm based.[41]

2.39The Committee sought to understand how the regime had led to products being redeployed, redesigned or provided to consumers in a different way, so as to enhance consumer protection. ASIC told the Committee:

…we have already exercised our stop order power under the regime on seven occasions where we have identified problematic conduct. This has included issues casting the net too widely, in terms of the consumers they are targeting, particularly when they are offering high-risk or niche investment products that are likely to have narrower target markets and require greater controls on distribution. We have 10 targeted surveillance projects on foot, focused on sectors where we are seeing consumer harm from poor design and distribution practices.[42]

2.40ASIC spoke favourably of interim stop orders for breaches of the DDOs as a ‘nimble tool’. It noted its first use of interim stop orders in July 2022.[43] ASIC’s interim orders against Responsible Entity Services (RES) Limited and two companies in the UGC Global Group prevented them from ‘issuing the relevant managed investment scheme interests or shares to retail investors’. In the RES case, the stop order was based on a likely mismatch between the targeted retail investors’ needs and the high-risk, illiquid, single asset investment being offered. In the UGC Global Case, high-risk funds were advertised without a prior TMD.[44] ASIC explained that the interim orders, lasting 21 days, could meaningfully disrupt firms and prompt positive behavioural change.[45] For example, it noted that the order against RES Limited was lifted on 10August 2022 following adjustments to the TMD.[46]

2.41ASIC told the Committee it had made further interim stop orders, mostly in relation to investment schemes and fund management products which ASIC considered high risk, but which targeted a customer cohort unable to tolerate such risk.[47]

2.42At the time of the 2022 public hearing, ASIC said the regime had not been in place long enough for its effectiveness to be assessed:

Even if the target market determination is fine—there's nothing wrong with it—the whole point of the system is that, 12 months from now, the product that's being sold in accordance with that TMD may not be performing in a way that was anticipated… or, for whatever reason, the target market determination has to be adjusted or the product needs to be adjusted… So I think we're several years away from seeing what's working and what's not working.[48]

2.43At the 2024 public hearing, the DDOs had been in place for three years. The Committee enquired about its effectiveness again. ASIC explained more time is still needed:

…three years isn't actually that long for this particular kind of regime, because part of the policy premise is the life cycle of the product. In the early days, we were very focused on target market determinations. Frankly, in the first 12 or 18 months, we saw some pretty poor TMDs… We went through a period of education where issuers and entities were getting used to the idea of what should be in a TMD, and we issued quite a few infringement notices…I think we'll be in a better position a year or two from now to be able to say something more sensible about whether there have been beneficial systemic impacts. By then… we would have seen the whole life cycle of the product play out many more times and hopefully would be able to stand back and say: 'Well, that worked. That was a good thing.'[49]

2.44ASIC also noted that although its earlier DDOs work focused on TMDs, its more recent efforts focused on distribution methods[50]—that is, whether products actually reach the targeted customers:

The phrase that's used in the DDOs is that that person has taken reasonable steps to ensure that the people to whom the product is sold are within that target market. What we've been looking at more there is both direct distribution, which might be things like how people use search terms and then respond to them as marketing opportunities, and, importantly, third-party distribution and how those third-party distributors are chosen and then monitored so that the person on whom the reasonable steps obligation remains—namely, the product issuer—can satisfy themselves that they're met.[51]

2.45ASIC also informed the Committee of its first final stop order under the DDOs regime, issued in April 2024 to Coral Coast Distributors (Coral Coast), trading as Urban Rampage.[52] Coral Coast operated 10 Urban Rampage stores in regional and remote locations across Western Australia, the Northern Territory and Queensland.[53] The stores sold household items to predominantly First Nations consumers, with the cost of the goods being recovered through deductions from those consumers’ Centrelink payments.[54] As Coral Coast offered credit through deferred deduction arrangements via Centrepay, it was required to comply with the DDOs.[55] ASIC told the Committee:

We had a significant body of evidence from individual consumers and from financial counsellors about the harm that this was causing to consumers. The effect of that stop order means that that business is no longer, at this stage, able to enter into those arrangements.[56]

2.46The Committee raised concerns about vulnerable consumers relying on ‘buy-now pay-later’ (BNPL) payment arrangements to purchase essentials such as groceries. ASIC validated such concerns, referring to its 2018 and 2020 reports on BNPL, which found that a persistent cohort of consumers experiences financial hardship as a result of using such payment arrangements.[57] At the 2022 public hearing, ASIC said it remains focused on identifying cases where financial products may cause harm, and that the DDOs were its main regulatory tool in this space.[58]

2.47In June 2024, the Australian Government proposed new consumer protection legislation that will see BNLP operators regulated as consumer credit under the National Consumer Credit Protection Act 2009.[59] This became law with passage of the Treasury Laws Amendment (Responsible Buy Now Pay Later and Other Measures) Bill 2024 in late November 2024.

2.48The Committee sought ASIC’s view on further areas where vulnerable consumers may stand to be exploited. ASIC explained that it closely monitors several areas, including the insurance industry.[60]

Insurance industry

2.49Responding to failures by insurers has been one of ASIC’s strategic priorities over the timeframe of these inquiries.[61] The Committee discussed ASIC’s views on breaches of insurance pricing promises, data on insurers’ remediation payments to affected customers, recent headline enforcement actions, and ASIC’s views on recommendations by the Committee’s flood insurance inquiry.

Insurance pricing promises

2.50A pricing promise is a representation by an insurer that it will provide a price-related offer (for example, a discount), a benefit (for example, a gift card) or other reward, and which includes a statement that consumers will save money by taking a certain action.[62] General insurers typically use pricing promises to attract new customers, encourage existing customers to stay with their brand, or incentivise customers to purchase additional policies.[63]

2.51ASIC emphasised the importance of insurers delivering on their promises to ensure consumers can effectively compare insurance products and ‘shop around’.[64] A competitive insurance marketplace is particularly critical, given the worsening problem of insurance unaffordability facing Australian households. ASIC explained:

…when an insurer sends a renewal notice to one of its customers making representations or statements that say, 'If you renew your policy with us, you will obtain this discount,' then that is clearly designed to encourage customers to reinsure with that particular insurer and to understand that, in doing so, they are getting some kind of benefit or positive outcome by way of a discount for so doing. So, if those promised discounts are being eroded behind the scenes…clearly that has a significant detrimental impact on those particular customers. It disincentivises them from shopping around and seeing whether they can get cheaper options elsewhere.[65]

2.52At the 2022 public hearing, ASIC informed the Committee it had ‘hit the pause button’ and asked general insurers to review their pricing practices.[66] Specifically, ASIC wrote to 11 insurers (collectively representing 68percent of the general insurance market in Australia) requiring them to review past offers for any inconsistency, or potential inconsistency, between pricing promises made and delivered.[67] In June 2023, ASIC published a report on these reviews, When the price is not right: Making good on insurance pricing promises.

2.53The report identified significant pricing promise failures by general insurers, and the improvements required to fix them.[68] The report observed that these failures often arose from an inability to properly manage non-financial risks. ASIC emphasised the same point at the 2022 public hearing:

With the pricing issues we're seeing with general insurers, again, it's a lack of investment in systems, unnecessarily complex products and pricing promises they couldn't even track through their systems to know if they had been able to discharge. So, for us, it brings home this message to the boards of these companies: managing these non-financial risks is key to managing financial risks.[69]

Remediation

2.54At the time the pricing report was issued, general insurers were remediating over $815 million to more than 5.6 million customers for pricing failures reported to ASIC since January 2018.[70] The Committee asked ASIC if it tracked and monitored such remediation programs. ASIC said it no longer monitors remediation due to resourcing constraints, and that the responsibility to monitor remediation efforts lies with insurers:

We cannot be overseeing each and every one of these significant programs. Were we to get information that any particular insurer was not properly implementing a remediation program, we would of course take action and look at that more closely. But we do take the view that we have to be able to trust large financial institutions to properly implement these remediation programs.[71]

2.55ASIC also noted the recent expansion of its remediation guidance:

Through our supervision of remediation programs, we identified gaps and best practice opportunities to ensure the onus is on firms to provide fairer, more consistent and timely outcomes for consumers. The guidance strikes a balance between practical advice to the industry and clear incentives to comply, setting standards for good recordkeeping that allows problems to be identified and fixed earlier.[72]

Headline enforcement actions

2.56ASIC told the Committee it had pursued extensive enforcement action against insurers for misleading customers about the value of discounts on insurance products, leading to unprecedented fines.

2.57Insurance Australia Limited, wholly owned by Insurance Australia Group Limited, was penalised $40million by the Federal Court for making false or misleading representations to over 600,000 customers between March 2014 and September 2019. The court found Insurance Australia failed to deliver the full amount of promised loyalty and no claims bonus discounts to customers upon renewal of their NRMA-branded insurance policies.[73] ASIC noted that this was the largest ever penalty imposed against an insurer in Australia for breaches of the financial services consumer protection laws.[74]

2.58Separately, RACQ Insurance Limited was ordered to pay a $10million penalty by the Federal Court for potentially misleading customers about pricing discounts in its product disclosure statements.[75]

2.59At the 2024 hearing, ASIC noted it had also commenced court proceedings against QBE Insurance (Australia) Limited, alleging they misled customers about the value of discounts.[76] The Committee asked what powers ASIC was utilising to pursue QBE. ASIC said:

That is using our general investigative powers. We issued compulsory notices to QBE. We called in executives to have compulsory examinations. We worked out whether or not there was sufficient evidence to put a matter to court. In this case, we concluded that there was and we filed the proceedings in the Federal Court. The next stage of that matter is that the matter will progress its way through the court, and the court will ultimately determine whether or not the law has been breached and what an appropriate penalty is.[77]

2.60ASIC noted that the problem was widespread in the insurance industry. It informed the Committee that as at mid-2023, when ASIC put general insurers ‘on notice’ about its concerns, the industry estimated total remediation requirements ‘close to a billion dollars…on the insurers’ own admission’.[78] ASIC also noted parallels between such cases and recent court action by the Australian Competition and Consumer Commission (ACCC) against Coles and Woolworths, alleging they engaged in misleading claims about price discounts.[79]

2.61ASIC explained that seeking additional financial penalties through the courts—on top of requirements to remediate customers—was necessary to send a strong signal to the industry that such practices are unacceptable:

ASIC's role here, as we see it, is that we're a law enforcement agency. We think it is important in a circumstance such as this, even where remediation is taking place, that the court determines whether or not a pecuniary penalty in addition to, effectively, consumers getting their money back is appropriate for two purposes. One is for specific deterrence to send a message to QBE itself that there are issues in engaging in this sort of misconduct and the other, potentially more importantly, is to send the message to the sector more broadly: if you're going to engage in this form of alleged misconduct and you are found to have breached the law then the court will impose significant pecuniary penalties in relation to that.[80]

Flood insurance inquiry

2.62On 18 October 2024, this Committee published the final report for its inquiry into insurers’ responses to 2022 major flood claims. The report examined policyholders’ experiences in the wake of the catastrophic 2022 floods, including poor claims management, lengthy delays, combative dispute processes, inconsistent expert reports and inadequate cash settlements. Its recommendations included significantly strengthening ASIC’s regulatory powers and oversight of the Australian insurance industry.[81]

2.63The 2024 ASIC hearing was held a week after publication of this report. The Committee sought ASIC’s initial reaction.

2.64ASIC noted that the report’s findings identified similar issues to its own report on the 2022 major floods published in 2023[82], including in key areas such as insurers’ communications, project management, complaints handling, resourcing and the recognition and treatment of vulnerable customers.[83] ASIC told the Committee:

Our initial observation…would be that it was pleasing, and in a sense also troubling, to see some very strong consistency of themes in the issues that ASIC identified through our program of work on insurance issues… It is very helpful to us to see some consistency in themes, and we will be looking in more detail at the inquiry's recommendations with that in mind.[84]

2.65The Committee noted in the flood report that insurers were highly inconsistent in their definitions of key performance indicators, making it difficult to make useful comparisons.[85] For example, the Committee noted the lack of industry agreement on what constitutes an ‘internal dispute’, resulting in dramatic differences in the dispute data reported across insurers.[86] The Committee recommended that ASIC develop and define key outcome measures for the consumer experience, including for communication, claims processing, vulnerable customers, internal and external dispute resolution, cash settlements, claims acceptance rates and compliance with the General Insurance Code of Practice.[87]

2.66On this recommendation, ASIC told the Committee:

…we believe that that is helpful because it allows people to make comparisons, but it also allows firms to benchmark their own practices…we think it will help to empower the people within those firms that are trying to drive better practices. It will also put independent commentators, consumer advocates and other bodies in a position to draw those comparisons as well and call for individual firms to improve their approaches.[88]

2.67The Committee also recommended legislative reform to provide ASIC with recurrent data-gathering powers on such metrics, and that ASIC also be empowered to collect such data quarterly for business-as-usual operations, and monthly after declared major insurance events.[89] ASIC expressed a clear view on this recommendation:

ASIC welcomes the recommendation that we be granted a recurrent data collection power… Obviously, we do collect data on a range of issues in partnership with APRA [the Australian Prudential Regulation Authority], where APRA's got systems and powers to do so, and we're able to collect data through one regulator and then share it… However, there are sometimes data collection needs that ASIC have in order to go about our job as a conduct regulator, particularly in insurance, that don't entirely overlap with the sorts of issues that are within APRA's remit… [W]e'd see it as a really useful complement to APRA's data collection powers and the arrangements we've got in place for sharing data with APRA.[90]

2.68With 23 of the 86 report recommendations relating to ASIC, the Commission said it would take time to carefully consider the report. ASIC further commented that ‘insurers have a lot of work to do to rebuild the trust and confidence of consumers’.[91]

Digital technology issues

2.69The Committee questioned ASIC on the regulatory implications of major data breaches—particularly the Optus hack—and ASIC’s activities in this area. ASIC noted that cyber/data security fell under the category of non-financial risks, which boards and directors are required to manage. ASIC advised that it had higher regulatory expectations of large firms with exposure to critical infrastructure. It shared the results of its latest cyber pulse survey, which suggested a large gap in the maturity of large versus small firms in managing cyber risks.

2.70The Committee also discussed the growing problem of scams. ASIC described its actions against investment scams, including its new scam take-down service. It also discussed its recent report identifying extremely low levels of bank reimbursements to scam victims.

2.71The Committee sought ASIC’s view on ‘finfluencers’ promoting investment strategies or tips online, often through social media. ASIC advised that although many finfluencers operating without relevant licences were well-meaning, this did not absolve them from lawbreaking. ASIC summarised its work to clarify finfluencers’ legal obligations, and discussed a recent high-profile court case upholding the requirement to hold an appropriate licence.

Cyber security and resilience

2.72The Committee sought ASIC’s views on the major breach of Optus’s customer database in September 2022, which exposed the confidential details of 9million current and former customers, including passport numbers, driver’s license details and personal addresses. ASIC said its ‘immediate priority’ was to ‘work with the ACCC and other regulators and government to minimise the consumer impact of this data breach’.[92] This included monitoring for increased scam activity, posting alerts to ASIC’s Moneysmart web page, and looking for opportunities to coordinate with the ACCC, Australian Communications and Media Authority (ACMA) and Office of the Australian Information Commissioner (OAIC).[93]

2.73ASIC advised that a regulatory or enforcement response would primarily be within the purview of ACMA and the OAIC, since Optus does not hold an AFS license. ACMA has since initiated court action against Optus.[94] However, ASIC said that if further investigations pointed to ‘a failure by directors or senior officers of Optus to discharge their duties to the company’, it could later become involved.

2.74ASIC also stressed that at a high level, cyber security fell under the category of non-financial risks, and that this was a ‘fundamental and continuing interest of ours and regulatory enforcement priority’:

In particular, we've looked at things like cyber-risk and cyber-resilience and, indeed, had a significant case in that area just last year that we are using to send these kinds of messages out. In relation to this particular data breach we have a watching brief, but obviously the fact of this incident, and the fact that we continue to read in the press that these kinds of incidents are not rare, is a significant opportunity for us to be talking about the importance of boards to be paying attention to financial risks…[95]

2.75At the 2024 hearing, ASIC updated the Committee on its cyber pulse survey—‘probably the most thorough one we’ve done in quite a while’[96] with nearly 700 responses. Alarmingly, ASIC reported that:

• 44 per cent of respondents said they did not manage third-party supply chain risk
• 58 per cent said they had limited or no capability for protecting confidential information
• 33 per cent said they had no cyber incident plan
• 20 per cent had not adopted any cyber security standard at all.[97]
  76. The survey showed that small businesses are particularly struggling to respond to the growing risk of cyber security breaches, with 34 per cent of small organisations not following or benchmarking themselves against any cyber security standard.[98] ASIC told the Committee that while larger, APRA-regulated entities had increasingly mature cyber security management capabilities, smaller businesses continued to struggle, ‘and so we continue to focus on that in terms of education, awareness, providing information and sharing best practice.’[99]
  77. ASIC explained the rationale behind this survey, and stressed directors’ legal obligation to acknowledge and manage foreseeable cyber security risks:

…part of the idea behind the pulse survey was to share that information with everyone and say, 'These are the sorts of issues you need to be focused on. Where's your data? What are your arrangements for supervising and understanding third-party vendors that are providing support to you? Do you have an incident response plan?' The fact of the matter is that most businesses at some stage are going to be the victims of some sort of attack, and they need to be ready to respond.

Most fundamentally, the other aspect of this…is that we're really reminding directors and people who run businesses that they have to take these issues very seriously. They're under a legal obligation to acknowledge this foreseeable risk to their business and to their customers, and to put in place systems and processes that are designed to deal with this risk.[100]

2.78ASIC acknowledged that its regulatory interventions would be informed by risk assessments, with commensurately greater expectations of businesses with large or sensitive data holdings, or intersections with critical infrastructure, compared with smaller firms with limited data and no connection with critical infrastructure.[101]

2.79However, the regulator stressed that operational resilience around IT and data was increasingly crucial even for small business—even without falling victim to a hack. Elaborating on the challenges small businesses face in levelling up, ASIC noted the difficulty accessing skilled resources to set up multi-factor authentication for online orders, as well as vendor management. It said it was working to raise businesses’ awareness of resources from the Australian Cyber Security Centre to assist with such challenges.[102]

Scams

2.80At the 2022 public hearing, ASIC said it had elevated scams ‘to be one of our eight strategic priorities’ that year. Outlining its work program, ASIC advised:

We predominantly recognise the role of the ACCC, particularly in consumer messaging, through the ACCC's Scamwatch website, but the ACCC's scams report this year highlighted that there was more money reported as having been lost as a result of investment scams than any other scam, and those investment scams fall within ASIC's jurisdiction. The reports were that upwards of $700 million was lost in relation to investment scams over the last reporting period, and we know that that's likely just the tip of the iceberg. So the work that we are doing is predominantly on disruption.

ASIC has a continuing relationship and works closely with a number of the major financial institutions. One of the projects we have this year is to look at the varying ways that financial institutions, particularly the major banks, are dealing with scams.[103]

2.81At the 2024 public hearing, ASIC updated the Committee on its work on investment and financial services scams, in particular its new ‘investment scam take-down service.’ With scams now evolving at a rapid pace, ASIC explained that a traditional investigation and enforcement response is no longer effective in protecting consumers.[104] The Committee heard that scam investigations can be lengthy and complex[105]; ASIC’s investment scam take-down service instead intends to quickly disrupt:

We have partnered with a global cybertechnology agency and have been working with them for more than a year now to get them—when we are alerted to a particular investment scam, we can very quickly, sometimes within hours, provide the information through to them and they can have that site taken down completely. They then monitor the site to make sure it doesn't reappear a few hours later… We've taken down more than 7,000 sites to date and are expecting that work to continue.[106]

2.82ASIC also said it was working closely with the National Anti-Scam Centre (NASC), established in July 2023. ASIC co-led (alongside the ACCC) the NASC’s first ‘fusion cell’, looking at investment scams. Fusion cells are time-limited taskforces which bring together expertise from different government and private sector participants to address specific, urgent scam problems. A number of scam prevention strategies came out of the fusion cell, including the automatic referral of relevant ACCC Scamwatch reports to ASIC’s scam website take-down service.[107]

2.83ASIC also rebranded and relaunched its Moneysmart investor alert list in November 2023:

Whenever we hear of an investment opportunity that we consider might be fraudulent or a scam, we do a quick piece of work to look at the offering. If we have concerns about it, we put it on our investor alert list. We are getting increasing numbers of people coming to that list to look at it, and we are very much hoping that serves to alert people where not to put their money…[108]

2.84Further, ASIC published two reports analysing the anti-scam practices of major financial institutions, highlighting areas where ASIC considered the banks could improve to minimise the impact of scams on their customers. The first report focused on Australia’s four major banks, published in April 2023, with the second August 2024 report looking at 15 financial institutions outside of the major banks.

2.85The Committee raised concerns in relation to the finding in the latter report that only 2percent of scam losses were reimbursed or compensated by the relevant banks if the customer did not complain.[109] Where the customer did complain, this figure increased, but only to 7 per cent.[110] ASIC noted that the first report on the four major banks similarly found that consumers who made a complaint to their bank about a scam loss were more likely to receive compensation or reimbursement.[111] ASIC shared the Committee’s concerns regarding these findings:

…there are many people that, for a range of reasons, won't have the confidence or the skill to make a complaint and to follow that process through… it shouldn't be the case that, just because you're a consumer that has the wherewithal to make a complaint, you're the one to get reimbursed.[112]

2.86The Committee sought ASIC’s view on whether consumers should suffer the losses of scams, or whether banks should be taking more action to protect their customers. ASIC responded:

That issue of liability and where the balance should lie… we're aware that is an issue that is being considered in the current policy debate. We try to find out what the facts are, we present them as clearly as we can, and otherwise leave it to our policy colleagues to advise.[113]

2.87The Committee asked ASIC for its view on individuals’ ability to protect themselves from scams. ASIC explained scams have become ‘exponentially sophisticated, difficult to detect for all of us and completely prolific’.[114] ASIC observed:

Ten or so years ago…we were alerting people and giving warnings to consumers about scams. It was relatively easy to tell consumers what to look for in a scam. They were relatively unsophisticated. You could tell people to look for poor spelling, poor grammar. So generally speaking, if you received a scam through an email or through a text, you could often get a sense that there was something not quite right about what was coming through.

It's fair to say that these days that has completely changed. …

The other thing that we're becoming increasingly familiar with is that effectively the word 'scam' understates what we are really dealing with here, which is global organised crime on an industrial scale. So we have people that are part of very sophisticated global syndicates that are sending scam emails, texts and social media posts throughout the world, and Australia is no different.[115]

2.88Asked about the obligations of large institutional players such as banks to better protect consumers, given this changed playing field, ASIC noted positive steps by the banks to counter scams, but warned that other actors also matter, such as telecommunications companies and large digital platforms:

…the banks are one part of the scam's ecosystem. Obviously they are at the end of the ecosystem. But there are certainly other players in that ecosystem, including the telecommunications companies and the digital platforms. I don't want to be an apologist for the banks. That would not be the right thing for me to do. But certainly over the last 12 to 18 months there have been increasing frictions being put on our transactions within the major banks. We had moved to trying to reduce frictions and make payments instantaneous. I think we're now all stepping back a bit and saying, 'Well, actually, that's perhaps facilitating some of this misconduct.'[116]

2.89ASIC also noted the Scams Prevention Framework under consideration by the Parliament:

…the framework will impose certain conduct obligations, investments and the like on the banks, the telecommunications companies and the digital platforms to achieve a certain level of ability to warn, detect, impede and halt transactions…where they do not live up to those requirements, liability will flow.[117]

2.90The Framework includes fines of up to $50 million for non‑compliance.[118] Now passed, ASIC will be one of the key regulators involved in its administration and enforcement.[119]

Finfluencers

2.91The Corporations Actrequires people carrying on a financial services business to hold an Australian Financial Services (AFS) licence.[120] The Act imposes significant penalties for unlicensed practice, including up to five years’ imprisonment for an individual and financial penalties into the millions for a corporation.[121]

2.92At the 2022 public hearing, the Committee inquired about finfluencers, whom ASIC described as ‘well-known people in the community or celebrities or individuals who are not the holder of a licence expressing views about what people should be investing their money in’.[122]

2.93Although unlicensed financial advice is not a new issue, social media has afforded such individuals the ability to influence Australians’ financial decisions on a much larger scale.[123] ASIC’s 2021 ‘Young People and Money Survey’ found that 64percent of young people reported changing at least one of their financial behaviours as a result of following a finfluencer.[124]

2.94ASIC’s Information Sheet 269 sets out how the financial services laws operate for social media influencers who discuss financial products and services online, and finfluencers’ obligations to ensure compliance with the law[125]:

… whether they [finfluencers] need a licence, whether they have gone over the line in providing advice when they shouldn't be—is part of our job and we have done a lot of work in that area through our engagement with the sector to warn them about the issues they face if they cross the line.[126]

2.95ASIC acknowledged that although some finfluencers may feel they are just ‘being helpful’, this does not mitigate wrongdoing.[127]

2.96In December 2022, the Federal Court found social media finfluencer Tyson Robert Scholz contravened the Corporations Act by carrying on a financial services business without an AFS licence.[128] Mr Scholz had delivered training courses and seminars about trading in ASX-listed securities and made recommendations about share purchases.[129] The Court noted that it did not matter that Mr Scholz’s posts did not contain overt recommendations: ‘it was enough that Mr Scholz referred to a company or its share in the stories, which was usually done in a way which indicated that he liked that company’.[130]

Greenwashing

2.97ASIC defines greenwashing as ‘the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical’.[131] Greenwashing is therefore a manifestation of misleading and deceptive conduct, prohibited by the Australian Consumer Law (ACL).[132] With greater investor and consumer interest in sustainability, greenwashing has a become a ‘whole of ASIC priority’:[133]

…we know these issues matter increasingly to investors. Firms, entities and trustees are responding to that interest by making all sorts of claims, in order to attract investors or purchasers of their product.[134]

2.98Combatting greenwashing is part of ASIC’s role in supporting well-informed investment decision-making and in preventing consumer harms.[135] ASIC further elaborated on its role:

…where a firm might say, 'We're going to have net zero emissions by 2030 or 2050.' ASIC's job there is to have a look at that and say: 'That's very interesting. You show us how you're going to achieve that. What are you actually doing on the ground today in 2022 that is likely to ensure that you will get there?' Obviously all these things are forward-looking claims and future claims, which means investigation can be somewhat challenging.[136]

2.99ASIC noted that greenwashing is increasing in both investment schemes and across the broader economy.[137] In combatting this uptick, ASIC told the Committee about its education efforts:

We did a review recently looking at product issuers, fund managers and super funds. Looking at those practices, we issued an information sheet—how do you avoid greenwashing—to remind them of what their obligations were with respect to misleading and deceptive statements and disclosures…We have reminded them of where the line in the sand is. In that information sheet, we posed some very simple questions like: Are your descriptions true to label? Do you have a reasonable basis to your targets?[138]

2.100ASIC also told the Committee about its enforcement success in relation to greenwashing. Notably, at the 2024 public hearing, ASIC had won its first civil penalty action for greenwashing, resulting in a landmark $11.3 million penalty for Mercer Superannuation Australia.[139] The Federal Court found that Mercer made misleading statements on its website about the sustainability of seven investment options.[140] In a media release on the decision, ASIC said it will ‘continue to monitor the market for ESG [environmental, social and governance] related claims that cannot be validated by evidence to ensure the market is fair and transparent’.[141]

Integrity of the Australian Carbon Credit Unit Scheme

2.101The Committee noted community concerns about businesses asserting environmental claims relying on allegedly low-integrity carbon credits. Within the Australian Carbon Credit Unit (ACCU) Scheme, participants can earn one ACCU for every tonne of carbon dioxide equivalent emissions their project stores or avoids.[142] Participants can sell ACCUs on the secondary market or to the Australian Government by entering a carbon abatement contract.[143] On the secondary market, private buyers can purchase ACCUs to voluntarily offset their emissions or meet compliance requirements.[144]

2.102Some projects which earn ACCUs have been criticised for not reducing emissions as promised, and therefore companies which bought such offsets had not actually reduced their impact on the climate as claimed.[145] For example, the Australia Institute claimed that ‘avoided deforestation’ projects often do not represent genuine abatement, with credits being issued for protecting areas that were never going to be cleared.[146]

2.103ASIC noted the importance of the integrity of ACCUs, given most corporate statements regarding net zero typically rely on some carbon credit offsets.[147] However, ASIC also said this was not a ‘forefront issue’ for the Commission, and that oversight of this space is shared with the Clean Energy Regulator and the ACCC.[148]

2.104At the 2022 public hearing, ASIC largely refrained from commenting further on the integrity of ACCUs, noting it was awaiting the outcome of the Chubb review to establish if there is in fact an ‘evidence base’ that necessitates further work on this issue.[149] In December 2022, the Independent Review of Australian Carbon Credit Units led by Professor Ian Chubb published its final report. The Panel concluded that the ACCU Scheme arrangements are overall sound and well-designed, though the report did recommend some changes, notably in relation to improving transparency.[150]

2.105The Committee sought ASIC’s view on whether companies who use carbon credits should be expected to engage in due diligence as to the integrity of those credits. ASIC responded that corporations are generally entitled to rely on the integrity of ACCUs at face value:

If a corporation is buying those credits in good faith based on what they appear to be doing or providing, then… that's a reasonable basis for saying, 'Here's why we're saying we're taking this approach, because we're buying these credits.' Depending on the circumstances, it's probably not reasonable for corporations, unless they're actually put on notice of a particular problem, to go behind that… Corporations are entitled to rely on the availability of carbon credits as long as the system, our economy, finds them credible.[151]

Green bonds

2.106Green bonds are fixed-income investments used to finance new and existing projects that offer climate change and environmental benefits.[152] The Reserve Bank of Australia (RBA) reported that Australian green bonds are mostly used to fund clean transportation projects, energy efficiency projects and green construction.[153] They can be purchased by superannuation funds, fund managers, insurance companies and other wholesale entities, but are not available to the public.[154]

2.107The Committee sought ASIC’s view on the integrity of the green bonds market in Australia. More specifically, the Committee enquired as to evidence that would indicate green bonds are being used to finance projects that offer legitimate environmental and sustainability benefits.

2.108ASIC explained that when green bond issuers in Australia make disclosures about the intended and actual use of their funds, they must meet the requirements of the Corporations Act 2001 and the Australian Securities and Investments Commission Act 2001—notably the requirement that the disclosures not be misleading, deceptive or false.[155]

2.109ASIC also recommended in its August 2024 report ASIC’s interventions on greenwashing misconduct 2023-2024 that issuers of green bonds avoid ambiguity when disclosing the potential use of proceeds to be raised under a green bond and ensure disclosure aligns with any current intended use of the proceeds.[156]

2.110ASIC said it lacked the expertise to test whether a green bond can be expected to achieve what it says it will, or any wider environmental impact.[157] In determining whether a claim may amount to greenwashing, the Clean Energy Regulator supports ASIC by sharing information, such as data from carbon emissions and energy use reporting.[158] The Clean Energy Regulator also refers greenwashing concerns to ASIC for regulatory action.[159]

2.111ASIC clarified its regulatory role with respect to the ACL:

…this is about misleading and deceptive conduct… You must make sure that your products do what they say they do…and also that you have the evidence to back it up… So, in the same way we would for any product, if there's a statement made about the product that it does this, we sometimes seek the evidence to demonstrate that it does… That's the way we approach the green bonds.[160]

Sustainability-related disclosure standards

2.112At the 2021 United Nations Climate Change Conference, the International Financial Reporting Standards (IFRS) Foundation announced the formation of the International Sustainability Standards Board (ISSB).[161] In June 2023, the ISSB published its first sustainability-related disclosure standards known as IFRS S1 and IFRS S2.[162]

2.113The IFRS are internationally recognised financial reporting standards, enhancing international comparability and enabling market participants to have greater trust in company disclosures and to make informed economic decisions.[163] IFRS S1 and S2 create a common language specifically for disclosing the effect of climate-related risks and opportunities on a company’s prospects.[164]

2.114In July 2023, the International Organisation of Securities Commissions, of which ASIC is a member, endorsed IFRS S1 and S2, noting they are a ‘major step towards consistent, comparable and reliable sustainability information’, and calling on its member jurisdictions to consider ways in which they might adopt, apply or otherwise be informed by the standards.[165]

2.115At the 2022 public hearing, ASIC told the Committee:

At the moment a lot of this is voluntary, but these standards are likely to become subject to government policy and become part of Australia's requirements for reporting standards in the next two to three years. This is all about taxonomy of risk and being able to disclose these issues in a consistent way so investors can know what they're dealing with when a company makes these disclosures.[166]

2.116After an initial consultation period, the Australian Accounting Standards Board (AASB) issued AASB S1 (aligning with the scope of IFRS S1) and AASB S2 (aligning with the scope of IFRS S2).[167] AASB S1 is a voluntary standard covering sustainability-related disclosures, while AASB S2 is a mandatory standard for climate-related reporting.[168]

2.117The mandatory requirements were enshrined in the Corporations Act 2001 following passage of the Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024 in September 2024.[169] The changes require many large Australian businesses and financial institutions to prepare annual sustainability reports containing mandatory climate-related financial disclosures from 1 January 2025.[170]

2.118Further, the Australian Government released its Sustainable Finance Roadmap (the Roadmap) in June 2024, intending to ‘modernise our financial markets and maximise the economic opportunities associated with net zero and our sustainability goals’.[171] The Roadmap includes the Government’s mandatory climate-related disclosure regime, and identifies additional priorities, notably greenwashing and improving access to climate and emissions data.[172] In relation to the Roadmap, ASIC commented:

…what we want to see is a much wider range and quality of information about climate in the financial market, in the form of metrics and measurable and comparable information… as a system, the quality and depth of information will assist investors to make good decisions…[173]

Second party opinion providers licencing

2.119ASIC reported that financial product issuers are increasingly seeking second party opinion (SPO) providers to verify the alignment of their financing instrument, program or framework with sustainability-based principles.[174]

2.120In June 2024, ASIC issued a two-year class no-action position in relation to the requirement under the Corporations Act 2001 that SPO providers must hold an AFS licence where the SPO is given in connection with an offer of financial products.[175] The class no-action relates to offers to wholesale clients only.[176]

2.121To conduct a financial services business in Australia, an AFS licence is required.[177] An AFS license, granted by ASIC, indicates that the business can meet basic standards such as training, compliance, insurance and dispute resolution.[178] The Committee enquired as to why ASIC removed the requirement of SPO providers to hold an AFS license. ASIC explained:

…we are not aware of any other jurisdiction currently requiring SPO providers to be licensed, but some have also not ruled out regulation. Through our work with IOSCO [the International Organization of Securities Commissions] we know that relevant SPO providers that operate globally have highlighted the need for cross-jurisdictional interoperability of any standards or requirements. ASIC is monitoring developments in other jurisdictions.

2.122While ASIC is waiting for the international regulatory landscape to evolve, the class no-action will apply until the end of 15 June 2026 unless revoked or modified.[179]

Other topics

The ASX’s CHESS platform failures

2.123The Committee sought ASIC’s views on work by the ASX (Australia’s stock exchange) to adopt a new settlement and clearing facility.

2.124The ASX’s failed efforts to replace its ageing Clearing House Electronic Sub-register System (CHESS)—its clearing and settlement system—have made headlines in recent years. ASIC investigated a major ASX outage in 2020, and imposed additional licence conditions on three licensees in the ASX Group, ‘directed at mitigating risks for future upgrades, with specific emphasis on the oversight of the CHESS Replacement Program, due to go live in April 2023.’[180]

2.125However, this $300 million project to replace CHESS with a blockchain-based system collapsed in 2022[181], leading to further regulatory action by ASIC and the RBA.[182] At the October 2022 hearing, ASIC told the Committee:

The fundamental issue or question that's on our minds at the moment, or my mind at the moment, is the replacement of the CHESS system, which is towards the end of its life and to be replaced with technology or a system that is based on distributors' ledger technology. This project is very significant. It's very complex. As we all know, it has been delayed now several times. Starting at the highest level, the ASX does not expect to be in a position, probably, until next year or early next year to announce a new start date, a new go live date. What it has done is appointed Accenture to do a review of the technology and that review is well advanced. Ernst & Young, the independent experts that're assisting ASIC in this matter, is playing a role giving us assurance on compliance with the conditions that ASIC imposed on ASX's license last year. EY, as the independent expert, will continue to look at the work of Accenture, and that too will form part of their assurance program.

The issue for the moment, and what's concerning everyone, are the questions: 'When will this system be ready? When it is ready, will it work? When do we think that's going to happen?' A lot of work is going on not only at the ASX itself but certainly within ASIC and the Reserve Bank to monitor and track the progress that's being made. We're in effect in continuous communication with ASX management on these issues. I and ASIC absolutely acknowledge these concerns and the significance of this project. We all know the ASX is absolutely critical infrastructure for the Australian economy, so our efforts in this area will have to continue for some time until the upgrade is achieved.

…[W]e are working very closely with the ACCC and, in particular, the Reserve Bank in connection with these issues because, although our focus today is the upgrade, we're also very interested in governance of the ASX and its approach to managing non-financial risk. They have been a lot of changes at the ASX. As we all know, a new CEO was appointed a little while ago. There have been a range of other senior management changes. So there's a lot going on at the ASX, and we're working closely with it and with the other regulators to make sure all of this goes in the right direction...[183]

2.126Further developments have occurred following that hearing:

• In June 2023, the Government passed legislation to facilitate greater competition in the provision of clearing and settlement services[184], challenging the ASX’s monopoly.
• In March 2024, the ASX paid a penalty of more than $1million following an ASIC investigation into its compliance with the Market Integrity Rules (the first time ASIC has issued an infringement notice to a market operator), due to ‘failure by ASX to correctly configure certain order functionality on its trading system’.[185]
• In April 2024, a Senate inquiry into problems with the CHESS project delivered its final report, finding that both ASIC and the RBA should have been more vigilant.[186]
• In August 2024, ASIC sued the ASX in the Federal Court, alleging it misled the market about the status of its CHESS replacement project.[187]
• In September 2024, the Government passed legislation giving regulators additional powers to intervene in the ASX.[188]
  127. At the time of writing, the CHESS system continues to experience significant errors and outages.[189]

ASIC search fees

2.128The Committee noted that Australians are charged a fee for ASIC searches, whereas they are free for the equivalent regulator in the United Kingdom and considered a public good. The Committee asked if ASIC searches should similarly be made free. ASIC explained:

Really, it is a question for government. We don't set those fees; they're part of the legislative structure. We know that searching is a very simple, protective measure for a lot of small businesses so they can verify who they're doing business with, so they can understand who the directors are behind that, and so they can see what things have been lodged. Certainly, in unlisted public companies the shareholders get benefits in terms of understanding what's going on with that company sometimes and outside of the meeting structures as well. So we do know that searching has a real public value, and, obviously, if it were free, it would probably improve that protective benefit that those types of searches give. But, at the end of the day, the revenue that relates to that and what will come from it are really matters for the government.

What I would say is there's obviously the current program of modernising the business registers, which includes, first up, the need for a director ID. Directors across the country have to have that by 21 November. Through that process there will be a simplified, much more modern platform, and the likelihood is the cost factor of running those searches and producing those searches will decrease over time. So there could be a valid argument then to reduce the search fees, if not bring them to zero.[190]

Other issues

2.129The Committee also briefly discussed the following issues:

• whether superannuation funds are correctly valuing their increasing holdings of unlisted assets, and the implications for financial stability—with ASIC advising that APRA is leading work on this issue[191]
• the most litigated provisions under the Corporations Act, ASIC Act and other sources of Australian corporate law[192]
• ASIC’s challenges attracting and retaining talent[193], and the organisation’s internal capability uplift work generally[194]
• ASIC’s reporting on the big four banks and other large institutions, and considerations when deciding whether to identify individual entities.[195]

Committee comment

2.130The Committee acknowledges the challenges ASIC faces in triaging the thousands of complaints and tip-offs it receives annually, and that not all complaints to ASIC are within its remit. However, the Committee expects ASIC to continue its efforts to communicate more satisfactorily with Australians who reach out for help.

2.131The Committee notes early signs of success from ASIC’s expanded intervention powers since the Hayne Royal Commission, including through the Design and Distribution Obligations, and encourages ASIC to continue to use its new tools judiciously.

2.132The Committee is concerned by ASIC’s reports of widespread misleading practices in the insurance industry, and notes ASIC’s significant action against major insurers. The Committee urges ASIC to remain vigilant on this issue.

2.133The Committee commends ASIC’s expanded efforts to counter scams, particularly its scam take-down service. The Committee notes that ASIC will have responsibilities under the newly legislated Scams Prevention Framework, and expects ASIC to work collaboratively with other regulators as the framework is implemented.

2.134The Committee will continue to be interested in ASIC’s work using its expanded powers to oversee and intervene in the ASX, in light of recent high-profile problems with the ASX’s CHESS system. The Committee considers it vital for Australia’s stock exchange to be trusted by market participants—and trustworthy. The Committee encourages ASIC to take whatever steps are necessary, in partnership with the RBA, to bring an end to the chaos of recent years.

Dr Daniel Mulino MP

Chair

26 March 2025

Footnotes

[1]Financial Regulator Assessment Authority (FRAA), Effectiveness and Capability Review of the Australian Securities and Investments Commission, July 2022, pp. 3–4, fraa.gov.au/sites/fraa.gov.au/files/2022-08/asic-assessment-report.pdf, viewed 29 January 2025.

[2]Australian Law Reform Commission, Confronting Complexity: Reforming Corporations and Financial Services Legislation, January 2024, p. 34.

[3]FRAA, Effectiveness and Capability Review of the Australian Securities and Investments Commission, pp. xv–xx.

[4]Senate Standing Committee on Economics, Inquiry into Australian Securities and Investments Commission investigation and enforcement, July 2024, p. xv, www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASICinvestigation, viewed 24 January 2025.

[5]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 2.

[6]Mr Warren Day, Chief Operating Officer, ASIC, Committee Hansard, 11 October 2022, Canberra, pp. 14–15.

[7]See Treasury, Update on the breach reporting regime, treasury.gov.au/consultation/c2021-155284/update-breach-reporting-regime, viewed 24 January 2025.

[8]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 14.

[9]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 9.

[10]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 9.

[11]Mr Warren Day, Chief Operating Officer, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 14.

[12]For background, see ASIC, ‘ASIC issues stop order on Theta product disclosure statements’, Media Release, 18 September 2017, asic.gov.au/about-asic/news-centre/find-a-media-release/2017-releases/17-316mr-asic-issues-stop-order-on-theta-product-disclosure-statements/, viewed 24 January 2025.

[13]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 17.

[14]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 3.

[15]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 13.

[16]ASIC, Regulatory Guide 100: Court enforceable undertakings, November 2021, p. 8.

[17]ASIC, Regulatory Guide 100: Court enforceable undertakings, p. 5, 11, 16.

[18]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, pp. 12–13.

[19]ASIC, ‘Macquarie Bank fined a record $4.995m for serious market gatekeeper failure’, Media Release, 25 September 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-211mr-macquarie-bank-fined-a-record-4-995m-for-serious-market-gatekeeper-failure/, viewed 24 January 2025.

[20]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 4.

[21]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 4.

[22]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 5.

[23]See Lucas Baird, ‘ASIC investigating Macquarie as part of Keystone probe’, Australian Financial Review, 25October 2024.

[24]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 16.

[25]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 16.

[26]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, pp. 13–14.

[27]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 14.

[28]Mr Greg Yanco, Chief Executive Officer, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 14.

[29]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 14.

[30]Ms Kate O’Rourke, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 15.

[31]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 15.

[32]Mr Joseph Longo, Chair, and Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, pp. 14–15.

[33]ASIC, Design and distribution obligations: Significant dealing notification requirements, asic.gov.au/regulatory-resources/financial-services/design-and-distribution-obligations-significant-dealing-notification-requirements/, viewed 29 January 2025.

[34]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 17.

[35]ASIC, Regulatory Guide 274: Product design and distribution obligations, September 2024, p. 6.

[36]ASIC, Regulatory Guide 274: Product design and distribution obligations, p. 6.

[37]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 5.

[38]Jonathan Barrett, ‘Collapsed funeral fund misrepresented itself as Aboriginal owned or managed, court finds’, Guardian, 29 February 2024, www.theguardian.com/australia-news/2024/feb/29/collapsed-funeral-fund-misrepresented-itself-as-aboriginal-owned-or-managed-court-finds, viewed 13 February 2025.

[39]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 6.

[40]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 17.

[41]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 17.

[42]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 1.

[43]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 16; ASIC, ‘ASIC’s first DDO stop orders to prevent offer of financial products to consumers’, Media Release, 28 July 2022, asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-194mr-asic-s-first-ddo-stop-orders-to-prevent-offer-of-financial-products-to-consumers/, viewed 28 July 2022.

[44]ASIC, ‘ASIC’s first DDO stop orders to prevent offer of financial products to consumers’, Media Release.

[45]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 16.

[46]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 16; ASIC, ‘ASIC’s first DDO stop orders to prevent offer of financial products to consumers’, Media Release.

[47]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 16.

[48]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, pp. 16–17.

[49]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 17.

[50]Ms Kate O’Rourke, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 16.

[51]Ms Kate O’Rourke, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 17.

[52]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 17.

[53]ASIC, ‘ASIC orders end to Centrepay credit arrangements in Urban Rampage stores’, Media Release, 26April 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-084mr-asic-orders-end-to-centrepay-credit-arrangements-in-urban-rampage-stores/, viewed 13 February 2025.

[54]ASIC, ‘ASIC orders end to Centrepay credit arrangements in Urban Rampage stores’, Media Release.

[55]ASIC, ‘ASIC orders end to Centrepay credit arrangements in Urban Rampage stores’, Media Release.

[56]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 17.

[57]ASIC, Buy now pay later: An industry update, November 2020, p. 12; ASIC, Review of buy now pay later arrangements, November 2018, p. 35; Mr Sean Hughes, Commissioner, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 15.

[58]Mr Sean Hughes, Commissioner, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 15.

[59]The Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, ‘Government introduces consumer protections for Buy Now Pay Later’, Media Release, 5 June 2024, ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/government-introduces-consumer-protections-buy-now-pay, viewed 13 February 2025.

[60]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 5.

[61]ASIC, ASIC enforcement priorities, asic.gov.au/about-asic/asic-investigations-and-enforcement/asic-enforcement-priorities/, viewed 29 January 2025.

[62]ASIC, When the price is not right: Making good on insurance pricing promises, June 2023, p. 2.

[63]ASIC, When the price is not right: Making good on insurance pricing promises, p. 2.

[64]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 6.

[65]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 6.

[66]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 6.

[67]ASIC, When the price is not right: Making good on insurance pricing promises, p. 3.

[68]ASIC, When the price is not right: Making good on insurance pricing promises, p. 12.

[69]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 6.

[70]ASIC, ‘ASIC alleges QBE misled customers over pricing discounts’, Media Release, 23 October 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-234mr-asic-alleges-qbe-misled-customers-over-pricing-discounts/, viewed 13 February 2025.

[71]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 7.

[72]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 2.

[73]ASIC, ‘IAL penalised $40 million over pricing discount failures’, Media Release, 30 June 2023, asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-179mr-ial-penalised-40-million-over-pricing-discount-failures/, viewed 13 February 2025.

[74]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 6.

[75]ASIC, ‘RACQ to pay $10 million for pricing discount failures’, Media Release, 30 November 2023, asic.gov.au/about-asic/news-centre/find-a-media-release/2023-releases/23-323mr-racq-to-pay-10-million-for-pricing-discount-failures/, viewed 13 February 2025.

[76]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 5.

[77]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, pp. 5–6.

[78]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 6.

[79]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 6.

[80]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 6.

[81]House Economics Committee, Flood failure to future fairness: Report on the inquiry into insurers’ responses to 2022 major floods claims, October 2024, p. 2.

[82]ASIC,Navigating the storm: ASIC’s review of home insurance claims, 16 August 2023.

[83]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 2.

[84]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 2.

[85]House Economics Committee, Flood failure to future fairness: Report on the inquiry into insurers’ responses to 2022 major floods claims, p. 157.

[86]House Economics Committee, Flood failure to future fairness: Report on the inquiry into insurers’ responses to 2022 major floods claims, p. 157.

[87]House Economics Committee, Flood failure to future fairness: Report on the inquiry into insurers’ responses to 2022 major floods claims, pp. 195–196.

[88]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 2.

[89]House Economics Committee, Flood failure to future fairness: Report on the inquiry into insurers’ responses to 2022 major floods claims, p. 196.

[90]Mr Alan Kirkland, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 3.

[91]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 2.

[92]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 2.

[93]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, pp. 2–3.

[94]Hannah Murphy, ‘Optus says it will defend allegations it failed to protect confidential details of 9 million customers in cyber attack’, ABC News, 23 May 2024, www.abc.net.au/news/2024-05-23/optus-to-fight-in-federal-court/103885104, viewed 23 January 2025.

[95]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 3.

[96]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 7.

[97]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 7.

[98]Ms Simone Constant, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 7.

[99]Ms Simone Constant, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 8.

[100]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 7.

[101]Ms Simone Constant, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 8.

[102]Mr Joseph Longo, Chair, and Ms Simone Constant, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 8.

[103]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 3.

[104]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 10.

[105]National Anti-Scam Centre, Disruption, www.nasc.gov.au/what-we-do/disruption, viewed 18 November 2024.

[106]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 10.

[107]National Anti-Scam Centre, Fusion cells, www.nasc.gov.au/reports-and-publications/fusion-cells, viewed 18 November 2024.

[108]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 10.

[109]ASIC, Anti-scam practices of banks outside the four major banks, August 2024, p. 3.

[110]ASIC, Anti-scam practices of banks outside the four major banks, p. 3.

[111]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 12.

[112]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 12.

[113]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 11.

[114]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 11.

[115]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 11.

[116]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 11.

[117]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 11.

[118]The Hon Stephen Jones MP, Assistant Treasurer and Minister for Financial Services, and the Hon Michelle Rowland MP, Minister for Communications, ‘Albanese Government introduces landmark Scams Prevention Framework’, Joint Media Release, 7 November 2024, ministers.treasury.gov.au/ministers/stephen-jones-2022/media-releases/albanese-government-introduces-landmark-scams, viewed 13 February 2025.

[119]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 10.

[120]ASIC, ‘ASIC issues information for social media influencers and licensees’, Media Release, 21 March 2022, asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-054mr-asic-issues-information-for-social-media-influencers-and-licensees/, viewed 13 February 2025.

[121]ASIC, ‘ASIC issues information for social media influencers and licensees’, Media Release.

[122]ASIC, ‘ASIC issues information for social media influencers and licensees’, Media Release.

[123]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 22 October 2024, Canberra, p. 8.

[124]ASIC, ‘ASIC issues information for social media influencers and licensees’, Media Release.

[125]ASIC, Discussing financial products and services online, asic.gov.au/regulatory-resources/financial-services/giving-financial-product-advice/discussing-financial-products-and-services-online/, viewed 15 November 2024.

[126]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 22 October 2024, Canberra, pp. 7–8.

[127]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 22 October 2024, Canberra, p. 8.

[128]ASIC, ‘Federal Court makes findings against social media “finfluencer” Tyson Scholz’, Media Release, 20 December 2022, asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-371mr-federal-court-makes-findings-against-social-media-finfluencer-tyson-scholz/, viewed 13 February 2025.

[129]ASIC, ‘Federal Court makes findings against social media “finfluencer” Tyson Scholz’, Media Release.

[130]ASIC, ‘Federal Court makes findings against social media “finfluencer” Tyson Scholz’, Media Release.

[131]ASIC, ‘Greenwashing: A view from the regulator’, keynote speech by ASIC Chair Joe Longo at the Responsible Investment Association Australasia Conference, 2 May 2024, asic.gov.au/about-asic/news-centre/speeches/greenwashing-a-view-from-the-regulator/, viewed 13 February 2025.

[132]ASIC, ‘Greenwashing: A view from the regulator’.

[133]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 10.

[134]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 10.

[135]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 1.

[136]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 9.

[137]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 7.

[138]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 7.

[139]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 1.

[140]ASIC, ‘ASIC’s first greenwashing case results in landmark $11.3 million penalty for Mercer’, Media Release, 2 August 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-173mr-asic-s-first-greenwashing-case-results-in-landmark-11-3-million-penalty-for-mercer/, viewed 13 February 2025.

[141]ASIC, ‘ASIC’s first greenwashing case results in landmark $11.3 million penalty for Mercer’, Media Release.

[142]Clean Energy Regulator, Australian Carbon Credit Unit Scheme, cer.gov.au/schemes/australian-carbon-credit-unit-scheme, viewed 24 October 2024.

[143]Clean Energy Regulator, Australian Carbon Credit Unit Scheme.

[144]Clean Energy Regulator, Australian Carbon Credit Unit Scheme.

[145]Adam Morton, ‘Australia’s carbon credits system a failure on global scale, study finds’, Guardian, 27 March 2024, www.theguardian.com/environment/2024/mar/27/australias-carbon-credits-system-a-failure-on-global-scale-study-finds, viewed 13 February 2025; the Australia Institute, The Problem with Carbon Credits and Offsets Explained, 23 February 2023, australiainstitute.org.au/post/carbon-credits-and-offsets-explained/, viewed 31 October 2024.

[146]The Australia Institute, The Problem with Carbon Credits and Offsets Explained.

[147]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 9.

[148]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 9.

[149]Ms Karen Chester, Deputy Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 9.

[150]Professor Ian Chubb, the Hon Dr Annabelle Bennett, Ms Ariadne Gorring and Dr Steve Hatfield-Dodds, Independent Review of Australian Carbon Credit Units, Executive Summary: Final Report Recommendations and Key Findings, December 2022, www.dcceew.gov.au/sites/default/files/documents/independent-review-accu-exec-summary.pdf, viewed 13 February 2025, p. 2.

[151]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 10.

[152]ASIC, ‘Warning: Scammers offering fake green bonds’, Media Release, 19 May 2022, asic.gov.au/about-asic/news-centre/articles/warning-scammers-offering-fake-green-bonds/, viewed 13 February 2025.

[153]Reserve Bank of Australia, Green and Sustainable Finance in Australia, www.rba.gov.au/publications/bulletin/2023/sep/green-and-sustainable-finance-in-australia.html, viewed 5 November 2024.

[154]ASIC, ‘Warning: Scammers offering fake green bonds’, Media Release.

[155]ASIC, QoN 004, p. [1]—available at House Economics Committee, Review of the Australian Securities and Investments Commission Annual Reports 2021, 2022 and 2023, Documents, www.aph.gov.au/Parliamentary_Business/Committees/House/Economics/ASICAnnualReport2023/Documents, viewed 26 March 2025.

[156]ASIC, QoN 004, p. [1]—available at House Economics Committee, Review of the Australian Securities and Investments Commission Annual Reports 2021, 2022 and 2023, Documents.

[157]Ms Kate O’Rourke, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 12.

[158]Clean Energy Regulator, Greenwashing, cer.gov.au/about-us/our-compliance-approach/compliance-and-enforcement-priorities/greenwashing, viewed 5 November 2024.

[159]Clean Energy Regulator, Greenwashing.

[160]Ms Simone Constant, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 13

[161]International Financial Reporting Standards (IFRS) Foundation, An update on the ISSB at COP26, www.ifrs.org/news-and-events/news/2021/11/An-update-on-the-ISSB-at-COP26/, viewed 31 October 2024.

[162]IFRS Foundation, General Sustainability-related Disclosures, www.ifrs.org/projects/completed-projects/2023/general-sustainability-related-disclosures/, viewed 31 October 2024.

[163]IFRS Foundation, Why global accounting standards?, www.ifrs.org/use-around-the-world/why-global-accounting-standards/, viewed 4 November 2024.

[164]IFRS Foundation, ‘ISSB issues inaugural global sustainability disclosure standards’, Media Release, 26 June 2023, www.ifrs.org/news-and-events/news/2023/06/issb-issues-ifrs-s1-ifrs-s2/, viewed 13 February 2025.

[165]International Organization of Securities Commissions, ‘IOSCO endorses the ISSB’s Sustainability-related Financial Disclosure Standards’, Media Release, 25 July 2023, www.iosco.org/news/pdf/IOSCONEWS703.pdf, viewed 13 February 2025.

[166]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, Canberra, p. 7.

[167]Australian Accounting Standards Board (AASB), ‘Australian Sustainability Reporting Standards AASB S1 and AASB S2 are now available on the AASB Digital Standards Portal’, Media Release, 8 October 2024, aasb.gov.au/news/australian-sustainability-reporting-standards-aasb-s1-and-aasb-s2-are-now-available-on-the-aasb-digital-standards-portal/, viewed 13 February 2025.

[168]AASB, ‘Australian Sustainability Reporting Standards AASB S1 and AASB S2 are now available on the AASB Digital Standards Portal’, Media Release.

[169]AASB, ‘Australian Sustainability Reporting Standards AASB S1 and AASB S2 are now available on the AASB Digital Standards Portal’, Media Release.

[170]ASIC, ‘ASIC urges businesses to prepare for mandatory climate reporting’, Media Release, 18 September 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-205mr-asic-urges-businesses-to-prepare-for-mandatory-climate-reporting/, viewed 13 February 2025.

[171]The Hon Dr Jim Chalmers MP, Treasurer, ‘A Sustainable Finance Roadmap to unlock more private capital’, Media Release, 19 June 2024, ministers.treasury.gov.au/ministers/jim-chalmers-2022/media-releases/sustainable-finance-roadmap-unlock-more-private-capital, viewed 13 February 2025.

[172]The Hon Dr Jim Chalmers MP, Treasurer, ‘A Sustainable Finance Roadmap to unlock more private capital’, Media Release,

[173]Ms Kate O’Rourke, Commissioner, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 13.

[174]ASIC, ‘ASIC grants class no-action position to second party opinion providers’, Media Release, 14 June 2024, asic.gov.au/about-asic/news-centre/news-items/asic-grants-class-no-action-position-to-second-party-opinion-providers/, viewed 13 February 2025.

[175]ASIC, ‘ASIC grants class no-action position to second party opinion providers’, Media Release.

[176]ASIC, QoN 005, p. [1]—available at House Economics Committee, Review of the Australian Securities and Investments Commission Annual Reports 2021, 2022 and 2023, Documents.

[177]ASIC, What is an AFS license?, asic.gov.au/for-finance-professionals/afs-licensees/do-you-need-an-afs-licence/what-is-an-afs-licence/, viewed 5 November 2024.

[178]Moneysmart, Australian financial services (AFS) licence, moneysmart.gov.au/glossary/australian-financial-services-afs-licence, 5 November 2024.

[179]ASIC, QoN 005, p. [1]—available at House Economics Committee, Review of the Australian Securities and Investments Commission Annual Reports 2021, 2022 and 2023, Documents.

[180]ASIC, ‘ASIC imposes additional licence conditions on ASX and issues expectations to improve market resilience’, Media Release, 24 November 2021, asic.gov.au/about-asic/news-centre/find-a-media-release/2021-releases/21-313mr-asic-imposes-additional-licence-conditions-on-asx-and-issues-expectations-to-improve-market-resilience/, viewed 23 January 2025.

[181]See for example: Eric Johnston, ‘Opinion—The real disaster behind ASX's spectacular tech blow-up,’ Australian, 18 November 2022.

[182]ASIC, ‘ASIC – RBA further regulatory response regarding the ASX CHESS replacement program’, Media Release, 15 December 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2022-releases/22-357mr-asic-rba-further-regulatory-response-regarding-the-asx-chess-replacement-program/, viewed 23 January 2025.

[183]Mr Joseph Longo, Chair, ASIC, Committee Hansard, 11 October 2022, pp. 4–5.

[184]The Treasury Laws Amendment (2023 Measures No. 3) Bill 2023.

[185]ASIC, ‘ASX pays $1,050,000 penalty for order information transparency failure’, Media Release, 7 March 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-039mr-asx-pays-1-050-000-penalty-for-order-information-transparency-failure/, viewed 13 February 2025.

[186]Parliamentary Joint Committee on Corporations and Financial Services, Statutory inquiry into ASIC, the Takeovers Panel, and the corporations legislation, Competition in clearing and settlement and the ASX CHESS Replacement Project: The CHESS Replacement Project is too important to fail, April 2024, www.aph.gov.au/Parliamentary_Business/Committees/Joint/Corporations_and_Financial_Services/OversightofASIC/Competition_in_clearing_and_settlement_and_the_ASX_CHESS_Replacement_Project, viewed 26 March 2025.

[187]ASIC, ‘ASIC sues ASX for alleged misleading statements’, Media Release, 14 August 2024, asic.gov.au/about-asic/news-centre/find-a-media-release/2024-releases/24-177mr-asic-sues-asx-for-alleged-misleading-statements/, viewed 13 February 2025.

[188]The Treasury Laws Amendment (Financial Market Infrastructure and Other Measures) Bill 2024.

[189]See for example: James Eyers and Ronald Mizen, ‘ASX reveals cause of embarrassing outage’, Australian Financial Review, 23 January 2025.

[190]Mr Warren Day, Chief Operating Officer, ASIC, Committee Hansard, 11 October 2022, Canberra, pp. 11–12.

[191]See the discussion in Committee Hansard, 11 October 2022, Canberra, p. 8.

[192]Discussed in Committee Hansard, 11 October 2022, Canberra, p. 11.

[193]Mr Joseph Longo, Chair, and Mr Warren Day, Chief Operating Officer, Committee Hansard, 11 October 2022, Canberra, p. 18.

[194]See Committee Hansard, 11 October 2022, Canberra, p. 2, 18; Committee Hansard, 25 October 2024, Canberra, p. 2.

[195]Ms Sarah Court, Deputy Chair, ASIC, Committee Hansard, 25 October 2024, Canberra, p. 12.