ASIC's Longo-range forecast: early indications signal a change in temperature within Australia's corporate regulator
ASIC's new Chair has made a notable stamp on the organisation since taking the reins, including an extensive structural review of its governance and strategy.
The Australian Securities and Investments Commission (ASIC) has weathered more than a few storms in recent months – including the circumstances surrounding the departures of its former Chair and Deputy Chair (who was also the head of enforcement).
The new Chair, Joe Longo (whose extensive experience includes time as the general counsel of an international bank and an enforcement role at ASIC), and his deputy, Sarah Court (a former Commissioner of the Australian Competition and Consumer Commission), commenced in their roles on 1 June 2021. The same day, Treasury announced that it would issue ASIC with a new Statement of Expectation (which would include a clear statement that the government "expects ASIC to support Australia's economy recovery from the COVID pandemic") and introduced the legislation establishing the Financial Regulator Assessment Authority (FRAA) to assess the effectiveness and capability of ASIC and the Australian Prudential Regulation Authority.
Mr Longo, however, isn't waiting for the Federal Government to dictate organisation change within ASIC through its revised statement of expectation or the oversight of the FRAA.
Almost immediately following his appointment, Mr Longo announced that ASIC had engaged PwC to conduct a four-week structural review to improve the issue of overlaps, gaps and confusion of ASIC's 10 existing divisions. Currently, the 10 divisions are overseen by 10 executive directors and six commissioners. Appearing at a Senate Estimates Committee on 2 June 2021, Mr Longo said that "during my first few months I will be engaging widely with ASIC staff and stakeholders with a view to understanding ASIC’s current strategy and approach to regulation and enforcement". At the time of writing, PwC's findings have not been made publicly available.
During the same appearance before Senate Estimates, Mr Longo emphasised that his key focus and priority is providing Australia with access to affordable financial advice and addressing the issue of excessive regulation. He noted that ASIC is reviewing industry and consumer group recommendations to make accessing digital advice easier and more affordable.
Those hoping Mr Longo and Ms Court might signal the departure of ASIC's much maligned 'Why not litigate?' strategy may be disappointed – in his first interview as Chair (with the national broadcaster, the ABC), Mr Longo made clear that while ASIC were committed to supporting business and consumers during the COVID pandemic, "nothing will change" relating to the ASIC's stance on litigation. He noted that ASIC is committed to remaining an active, credible law enforcement agency and will not compromise that aim simply to be more "business-friendly".
Mr Longo has also made a number of comments signalling ASIC's continued focus on areas of technological development relevant to the financial services industry. In the same ABC interview and during a Parliamentary Joint Committee hearing on Corporations and Financial Services on 18 June 2021, Mr Longo said that 'finfluencers' will be a big area of concern for ASIC, and the regulator will take a hard line on monitoring unlicensed investment advice online. Financial advice cannot be given by an unlicensed adviser regardless of the platform on which it is provided. Similarly, ASIC is closely reviewing the trading of crypto assets (not currently regulated by the Corporations Act) with a view to minimising the risk to consumers in "an area of significant fraud concerns".
It remains to be seen whether Mr Longo's ambitions will result in the sunny outlook the regulator is hoping for.