ASIC on the prowl in 2015

Tim Stewart
— 1 minute read

The public scrutiny of ASIC throughout 2014 has left the financial services sector with a noticeably more vigilant regulator, says Hall & Wilcox partner Harry New.

Mr New, whose clients cover “the full gamut” of financial services, told InvestorDaily that ASIC is definitely “asking more questions” of the industry – particularly when it comes to new products.

“In my recent experience there seems to be more inquiry into products that are being proposed by those applying for a licence,” he said.


The final report of David Murray’s Financial System Inquiry included a recommendation that ASIC be granted product intervention powers, similar to those held by the Financial Conduct Authority in the UK.

While ASIC may not have powers to intervene in products ‘per se’, the regulator is definitely making it harder than it used to be to launch a new product, Mr New said.

“When you apply for a licence you need to describe your proposed business, as well as your strategy and plans.

“They are asking more questions. It would appear that ASIC is interested in finding out more and using it as a means for gathering information,” Mr New said.

In most cases licences are still being provided for new products, but the process is a longer one and ASIC appears to be consciously drawing it out, he said.

“What they’re also doing more of is conducting risk assessments of particular industries and products.

“So if you’re applying for a licence for something like foreign exchange trading platforms, that will be a much harder process (and licence) to get than if you were going for a wholesale equities fund, say,” he said.

Derivatives-based products are up for more scrutiny as opposed to less complex products, he added.

ASIC is also drawing out other processes such as the lodgement of breach reports and administrative documents, Mr New said.

“Whereas I think many may have been more perfunctory in the past, ASIC seems to be responding to them in a way that they might not have in the past,” he said.

The concept of product intervention, conceptually, is “quite a leap forward” in a market-based economy, Mr New said.

“Traditionally, as long as someone was given all the information that they needed – and regulation tries to facilitate that – then everyone has a choice about what they wish to invest in,” he said.

“Product intervention is not merely about compliance, it’s about whether a regulator thinks a product is appropriate or not.

“This appears to mark a shift away from just disclosure to protecting retail investors by pulling products from the market or not allowing them to be marketed,” he said.


ASIC on the prowl in 2015
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