Keeping on top of the latest financial services regulatory & compliance trends?

Investing time in your professional development within a rapidly changing financial services industry is challenging. To meet that challenge, the Australian regulators weekly wrap is designed to keep you at forefront of your practice by quickly setting out the top 5 developments from the past week, analysis and practical considerations for the future.

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  1. Regulatory performance (ASIC): the Regulator Performance Framework provides a set of six common KPIs for Australian Government regulators, and ASIC has just released its self-assessment of its performance against the KPIs in 2019–20. It felt it largely met its goals, for e.g. not unnecessarily impeding the efficient operation of regulated entities. What is interesting is the ancillary information ASIC provides to justify its position. Two areas stand out to me. First, enforcement. In 2019–20, there was: an 11% increase in the number of investigations; a 48% improvement in the time taken to file civil penalty proceedings; an increase in the total civil penalties imposed, from $12.7 million to $25 million; and, a 57% increase in the number of custodial sentences imposed (including those fully suspended). There was also a ‘greater focus on individual accountability in ASIC’s enforcement work in 2019–20, resulting in the number of individuals charged with non-summary criminal offences increasing by 35%, and the number of civil penalty claims against individuals increasing by 40%.’ Expect that trend to continue, especially when ASIC gets its hands on the Financial Accountability Regime later this year. Second, the analytics ASIC is increasingly using. ASIC has again emphasized that it is leveraging recent investments in its data capabilities to help it identify early warning signs of harm and misconduct and ensure its regulatory interventions are effectively designed and targeted, stating ‘Our work on whether fund managers’ investment products were ‘true to label’ (i.e. the product name aligned with the underlying assets) was based on data gathered from over 350 managed funds. We used a combination of tools, including risk-based surveillances (to identify products with inappropriate or confusing product labels), investigation, and intervention (sending letters of concern to regulated entities). We asked 37 funds to take corrective action to ensure their products are true to label’. More enforcement, and more tech in the undertaking of that enforcement are the key takeaways for me.

Thought for the future: ASIC is no delayer when it comes to technology. Its report in January 2021 covered the voice analytics / technology-assisted-review ASIC is deploying to sift through huge amounts of data, and this week’s scorecard covers some of the tools it has out there in the ether to pick up potential misleading and deceptive conduct. Having recently assisted a client who has been on the other side of one of these notices, I was rather impressed. Aside from being aware of this general trend, my continued sense is that technology needs to meet technology and financial services businesses need to continually reinvest in technology to meet what are increasingly complex and voluminous regulatory burdens obligations placed on them.

AU financial services lawyer in compliance, regulatory & disputes. Email sign-up: http://eepurl.com/gG9Kk1 and LinkedIn: https://www.linkedin.com/in/lthennessy/