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Regulatory Roundup: ASIC’s 2024 focus areas and 2025 enforcement priorities

ASIC recently published its enforcement priorities for 2025. In this article, we examine whether ASIC has met its strategic priorities and objectives in 2024 and which sectors will be impacted by ASIC’s 2025 enforcement priorities. We also briefly consider the progress of the reforms originating from the Quality of Advice Review in 2023.

ASIC’s 2024 focus areas

One of ASIC’s focus areas in 2024 was the identification of greenwashing misconduct, and intervention to reduce harm to investors and consumers and maintain market integrity. ASIC delivered on its promise, commencing separate proceedings against Vanguard Investments Australia Limited (Vanguard) and Mercer Superannuation (Australia) Ltd (Mercer).

In March 2024, ASIC won its first greenwashing civil penalty case against Vanguard, who was found to have contravened the ASIC Act 2001 (Cth) by making false or misleading representations regarding one of its investment funds. Vanguard had represented that:

  • its investment fund offered an ethically conscious investment opportunity;
  • before being included in the fund, securities were researched and screened against applicable ESG criteria; and
  • securities that violated the criteria were excluded or removed from the fund.

These representations were found to be misleading, and Vanguard was ordered to pay a $12.9 million penalty.

In August 2024, ASIC was successful in its Federal Court action against Mercer, which made representations to customers that its “Sustainable Plus” investment options excluded investments in companies involved in industries associated with the production or sale of alcohol, gambling and the extraction or sale of carbon intensive fossil fuels.

These representations were found to be misleading as the Sustainable Plus options did have investments in several companies involved in these industries. Mercer was ordered to pay a $11.3 million penalty.

In Mercer, Justice Horan commented that ‘… it is vital that consumers in the financial services industry can have confidence in ESG claims made by providers of financial products and services … Any misrepresentations in relation to ESG policies or practices associated with financial products or services, whether as an aspect of “greenwashing” practices or otherwise, undermine that confidence to the detriment of consumers and the industry generally’.

 

ASIC’s enforcement priorities for 2025

On 14 November 2024, ASIC announced its enforcement priorities and identified its focus areas for 2025.
ASIC Deputy Chair Sarah Court stated ‘‘our 2025 enforcement priorities reflect the increased risks consumers are facing that are being driven by cost of living pressures. These priorities are about protecting Australians from financial harm and targeting the people who try to take advantage of them”.

In analysing these priorities, we see a focus on misconduct exploiting superannuation savings, strengthening the investigation and prosecution of insider trading, licensee failure to have adequate cyber-security protections, greenwashing and misleading conduct involving ESG claims and member services failures in the superannuation sector. These areas are considered further below.

Misconduct exploiting superannuation savings

In her opening remarks at the 2024 ASIC Forum, Ms Court stated that ASIC has observed some “disturbing scenarios” involving the partial or complete loss of client superannuation balances, due to receiving poor advice from financial advisers. A common example is where a consumer is “advised, enticed or mislead” to withdraw superannuation savings from a regulated fund, and to invest them, often through the vehicle of a self-managed super fund. ASIC has commenced proceedings against multiple superannuation funds in 2023 and 2024—for example, against Cbus— a trend that will likely continue into 2025.

Strengthening the investigation and prosecution of insider trading

Ms Court stated that ASIC aims to ensure Australia has “one of the cleanest markets in the world” and has established a specialist team to investigate their surveillance results, to ensure the market remains free of insider trading. This team’s work in strengthening ASIC’s investigation and prosecution of insider trading will be a key focus in 2025.

Licensee failure to have adequate cyber-security protections

Ms Court emphasised the importance of a financial services or credit licensee’s obligation to implement adequate security protections, to safeguard consumers’ information and data in the event of a breach. ASIC’s focus in 2025 will be on licensees who have not adequately prepared for such a breach.

Greenwashing and misleading conduct involving ESG claims

In 2025, ASIC will continue its focus on investigating and taking enforcement action against companies in relation to greenwashing and may even be broadened to include listed entities and superannuation funds.

Member services failures in the superannuation sector

The need to regulate member services failures in the superannuation sector was apparent in 2024, with ASIC bringing an action in November 2024 against United Super Pty Ltd, the trustee of Cbus (Construction and Building Unions Superannuation Fund), for delays in processing claims for death benefits and total and permanent disability insurance. ASIC alleges that during a period of about 2 years from September 2022 to November 2024, United Super failed to act efficiently, honestly and fairly in the handling of these claims. This will continue as an area of focus in 2025.

Delivering Better Financial Outcomes

The impact of the Treasury Laws Amendment (Delivering Better Financial Outcomes and Other Measures) Act 2024 (Cth), which followed the Government’s Quality of Advice Review (QAR), will continue to be closely monitored by those in the financial services sector.

The legislative journey which led to this Act, from the Government’s initial response to the QAR on 13 June 2023 and final response on 7 December 2023, to the Bill’s tabling on 27 March 2024 and its royal assent on 9 July 2024, encountered a roadblock in early July 2024, with the Bill’s return to the House of Representatives just hours after the Senate’s approval following last minute amendments to the Bill.

The Act implements 11 recommendations of the QAR, with consultation ongoing on the other recommendations. The Honourable Stephen Jones MP, Minister for Financial Services, has stated the Act “implements reforms which reduce unnecessary red tape that adds to the time and cost of preparing financial advice without providing consumer benefits”.1

On 4 December 2024, Minister Jones announced that the next tranche of the Act will deal with the new class of adviser, the best interests duty, removal of the safe harbour steps, and statements of advice, among other things. However, it is not known when the next tranche of reforms will be introduced.

Footnotes

  1. Albanese government passes financial advice laws | Treasury Ministers.

Thaw Thaw Htin

Principal

Disclaimer: The information published in this article is of a general nature and should not be construed as legal advice. Whilst we aim to provide timely, relevant and accurate information, the law may change and circumstances may differ. You should not therefore act in reliance on it without first obtaining specific legal advice.

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