Enforcement priorities: ASIC sets the tone for 2024

ASIC has reset its enforcement priorities for 2024 – and set the tone for the year ahead.

The 2024 priorities highlight ASIC's continued focus on protecting consumers from misconduct – with ASIC placing an emphasis on the specific industry sectors of superannuation (which is notably the focus of two new priorities), insurance and small business. We set out our observations of the new priorities and the opening remarks of ASIC's Deputy Chair Sarah Court at the recent ASIC Annual Forum below.

New enforcement priorities introduced for 2024

• For superannuation, new priorities include member services failures and misconduct resulting in the systematic erosion of superannuation balances. Ms Court highlighted that in the coming year ASIC "maintain [its] enforcement focus in the superannuation area".
• Insurance claims handling. Ms Court stated that ASIC "will focus on delays in claims handling, poor communication and record keeping, and inappropriate use of exclusions."
• Compliance with the reportable situation regime. The new reportable situation regime commenced on 1 October 2021 and has been the subject of ongoing regulator and industry consultation which we have written about previously. Ms Court said that "compliance with the new regime is low – with a disappointing 89% of licensees not reporting against this regime at all". ASIC has indicated that it will take a "stronger approach to compliance in this area, and we have recently commenced a targeted surveillance of those licensees who are not reporting to us as we would expect."
• Conduct impacting small business including small business creditors.
• Enforcement action targeting gatekeepers (auditors, registered liquidators and financial services and credit licensees) facilitating misconduct. Ms Court noted that ASIC had an important role to "identify and limit misconduct in the entities they advise or authorise".
• Misconduct relating to used car financing to vulnerable consumers including brokers, car dealers and finance companies.
• Compliance with financial hardship obligations.
• Technology and operational resilience for market operators and market participants. In Ms Court's words ASIC's "enforcement work is critical to maintaining properly functioning markets." with such a position reflected in the "enduring priorities" to prevent misconduct that are outlined below.

Existing priorities from 2023 which have been retained in 2024:

Enforcement action targeting poor distribution of financial products.

Misleading conduct in relation to sustainable finance including greenwashing.

High-cost credit and predatory lending practices to consumers and small business. This was previously described in the 2023 priorities as "Protecting financially vulnerable consumers impacted by predatory lending practices or high-cost credit including conduct by unlicensed or 'fringe' entities".

Several priorities from 2023 do not appear in the 2024 priorities, for example:

• Misconduct involving high risk products including crypto assets.
• Combating and disrupting investment scams including working with other regulators, industry and social media platforms to reduce consumer harm.
• Manipulation in energy and commodities derivatives markets.
• Unfair contract terms including in insurance products.

Enduring priorities

ASIC has also retained the "enduring priorities" described as the "forms of misconduct that we will always priorities given the potential harm that arises from them". 

ASIC has kept the following 2023 'enduring priorities' of:

• Misconduct damaging market integrity including insider trading, continuous disclosure breaches and market manipulation;
• Misconduct impacting First Nations people;
• Misconduct involving a high risk of significant consumer harm particularly conduct targeting financially vulnerable consumers;
• Systemic compliance failures by large financial institutions resulting in widespread consumer harm;
• New or emerging conduct risks within the financial system,

And added to that list a further enduring priority of:

• governance and directors' duties failures.

ASIC's enforcement and enduring priorities provide industry with an appreciation for the subject matter that ASIC intends to target in 2024 and is a timely reminder for those needing assistance to ensure compliance with their legal obligations.