ASIC outlines regulatory priorities in an evolving landscape

ASIC Commissioner Alan Kirkland highlighted ASIC’s priorities in a changing regulatory landscape.

In a speech at the Australian Finance Industry Association (AFIA) Risk Summit, ASIC Commissioner Alan Kirkland highlighted ASIC’s priorities in a changing regulatory landscape.  

The speech focused on five key areas, which are explored below: supporting vulnerable consumers, mandatory climate-related disclosures, scams, artificial intelligence, and cybersecurity.  

Supporting vulnerable consumers 

Kirkland acknowledged that many Australians are currently experiencing financial hardship, and in this climate, the industry needs to step up in supporting vulnerable consumers.  

Brokers are playing a key role in ensuring vulnerable consumers don’t slip through the cracks. The Insurance Brokers Code of Practice (the Code) outlines the commitment of Code subscribers to identify and support vulnerable customers. Recently, the IBCCC also released a Guidance Note that highlighted the many ways through which brokers could help in supporting vulnerable clients.    

Mandatory climate-related disclosures 

ASIC is placing a significant focus on the nature of disclosures and representations related to climate change and sustainable finance made by firms to the market and consumers. With 90% of the global GDP now covered by net zero targets around mid-century, and 80% of the ASX200 companies setting climate-related targets, protecting market integrity through this transformation is crucial. 

ASIC will oversee the government's proposed mandatory climate-related disclosure regime. This regime will be phased in over several years, eventually applying to over 6,000 entities. ASIC encourages companies to begin preparing now by establishing necessary systems, processes, governance practices, and data recording methods. 

While the primary reporting requirements will target large businesses and financial institutions, small and medium-sized enterprises (SMEs) may also need to engage with climate reporting. 

Scams 

In 2023, Australians lost $2.74 billion to scams, with $1.3 billion lost to investment scams. The rise in scam losses is largely enabled by technology.  

While scam losses remain high, recent data shows a 13.1% decrease in 2023 compared to 2022, indicating progress. The increased reporting of scams suggests growing public awareness, which is crucial for quick action against evolving scams. 

The proposed Scams Code Framework, supported by ASIC, will impose anti-scams obligations on key sectors, enhancing efforts to prevent and respond to scams. 

Artificial Intelligence (AI) 

AI presents both opportunities and risks. ASIC is conducting a review of AI use in the banking, credit, insurance, and financial advice sectors. The agency is concerned about balancing AI's benefits with responsibilities to consumers and investors. 

Existing laws continue to apply to AI-related activities, and ASIC is prepared to act against misleading representations or breaches facilitated by AI. Companies must navigate AI's potential while adhering to their legal obligations. 

Cybersecurity 

Cybersecurity is a critical focus for ASIC. With cyber-attacks occurring every six minutes, businesses must be prepared to prevent and respond to such incidents. ASIC's collaboration with the Council of Financial Regulators (CFR) on cyber-attack simulations revealed vulnerabilities, particularly in password management. 

Implementing basic measures like multi-factor authentication (MFA) could prevent many cyber-attacks. ASIC insists that cyber risk management requires board-level attention.  

You can read the full transcript of Kirkland’s speech here.