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Financialservicesprovidersbeware:ASICsregulatoryprioritiesoverthenextfouryearsCorrsChambersWestgarth

FINANCIAL SERVICES PROVIDERS BEWARE: ASICS REGULATORY

PRIORITIES OVER THE NEXT FOUR YEARS
1September2015
ByMichaelChaaya(Partner)&JonathanGardner(Lawyer)

Investmentbanks,issuers,brokers,lenders,financialmarketparticipants,responsibleentities,company
directors,auditorsandinsolvencypractitionersareallinASICssightsforincreasedregulatoryscrutinyover
thenextfouryears.ThesefocusareaswereunveiledyesterdayinASICsCorporatePlan,withASICalso
detailingtheextensivemarketsurveillanceitwillundertaketoensurecompliancewiththelaw.
ASICsprioritiesforthenextfouryearsarecomprehensive.Inshort,ASICisfurtheringitsconsumerprotection
mandatebyrespondingtopoorgatekeepercultureandconductthroughappropriateregulatorymeasures.Where
ASICssurveillancemeasuresidentifywrongdoing,ASICwilltakeenforcementactionoracceptenforceable
undertakings.AllentitiesareonnoticeofASICssurveillanceareasandshouldreviewtheircompliancewiththetarget
areasASIChasidentified.Ifanydeficienciesarediscovereditiscrucialthatimmediateactionistakentorectifythose
deficiencies.WehavesummarisedASICsfocusareasbelow.
Entity

WhatisASICsfocus?
Reviewingmarketpracticesonconfidentialinformationandactingtoimprove
standardsandbehaviourinhandlingconfidentialinformation.
Proactivelyinvestigatingbenchmarkmanipulationandthepracticesof
investmentbanks.

Investmentbanks,
issuers,brokersandother
serviceproviders

Monitoringwaysinvestmentbanksmanageconductriskandidentifyingpotential
gaps.
Conductriskistheriskofinappropriateorunlawfulbehaviourbystaff.
ExaminingM&Aandfundraisingactivitieswhichmaybehighconductrisk
activities,inparticulartransactionsinvolvingbackdoorlistings,substantial
overseasassetsorhighlevelsofintangibleassets.

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Investigatingbreachreportsandreportsofmisconduct.
Targetingmarketoperatorsandparticipantstoidentifyweakcompliance
systems.

Lendersandfinance
brokers

Monitoringlenderscompliance(includingfinancebrokersandmarginlenders)
withresponsiblelendingandgeneralconductobligations.Aparticularfocuswill
beinterestonlyloans.
Assessingandreducingthesaleofinappropriatelendingproducts,including
compliancewithrecentlyintroducedinterestratecapsandconsumerleases.

Consideringtheadequacyofpoliciesdealingwithincentives,conflictsof
interest,whistleblowing,complaintshandling,remediation,recruitmentand
training.
Reviewingriskmanagementarrangementsinthemanagedfundssector,
includingconflictmanagement,liquidityandleverage.
Reviewingriskprofiledresponsibleentitieswithafocusonopaqueandcomplex
structures,liquidity,mandatecomplianceandcustodyarrangements.
Responsibleentities

Identifyinginappropriateconductbyassessingbreachreportsandreportsof
misconductandincorporatingcultureandincentivesmoreexplicitlyintorisk
basedsurveillancereviews.
Assessinglimitationsonfinancialserviceslicensingforresponsiblemanagers
andresponsibleofficers,especiallyinthecontextofthelicenseesforhire
businessmodel.
Monitoringinnovationsandnewfinancialproductsandservices.

ReviewingcorporatetransactionandfundraisingdocumentslodgedwithASICto
improvethequalityofinformationprovidedtoinvestorsandthemarket.
Reviewingtheadequacyoffinancialreportsoflistedandotherpublicinterest
entities.
Directors,auditorsand

Examiningauditfirmbusinessmodelstoensureappropriateexperienceand
expertiseisappliedtoincreasinglycomplexclientsandbusinesses,financial

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insolvencypractitioners

reportingjudgmentsandauditapproaches.
Investigatinghighriskinsolvencypractitioners(includingpreinsolvency
advisers),focussingonindependence,competence,impropergainand
remuneration.
Reviewingsystemicnoncompliancebyinsolvencypractitionerswithstatutory
lodgementobligations.

Wewillcontinuetomonitoranyregulatorydevelopmentsandprovidefurtherupdatesthroughouttheyear.Ifyouhave
anyconcernsastohowyourbusinessmaybeimpactedbytheseregulatoryprioritiesforASIC,pleasecontacta
memberofourteam.

RELATED CONTENT
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Expertise

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FinancialServices
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WillyourinternalcompliancepasstheASICtest?Stepstotakebeforetheregulatorcomes
knocking
Thinking|8July2014
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ASenaterecommendationthatASICincreasesurveillanceisamessagetoAFSLholderstogettheirinternalcompliancein
order.

ASICrattlesalonghiddensabrebyissuingawarningthatitwillseekrecoveryofexpenses
associatedwithitsinvestigations
Publications|30July2015
ASICreleasedaninformationsheeton29July2015alertingrelevantstakeholdersofitsintentiontoutiliseitspreexisting
powersundersection91oftheASICActtoseekrecoveryofitsinvestigationcostsandexpenses.

CONTACTS
DanielMarquet
Partner.Melbourne
+61396723172

KirstySutherland
Partner.Perth
+61894601620

MichaelChaaya
Partner.Sydney
+61292106627

MichaelKimmins
Partner.Brisbane
+61732289377

RichardFlitcroft
Partner.Sydney
+61292106435

StanLewis
Partner.Sydney
+61292106955
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JoanneDwyer
SpecialCounsel.Brisbane
+61732289375

ChristineMaher
Consultant.Brisbane
+61732289413

JonathanGardner
Lawyer.Sydney
+61292106469

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