How ASIC puts its ‘lofty ambitions’ into practice

ASIC commissioner Simone Constant has stressed the importance of a clean financial market that inspires confidence, explaining that building this trust remains front of mind for the corporate regulator.

Speaking at the Stockbrokers and Investment Advisers Association (SIAA) 2024 Conference in Melbourne last week, she said ASIC reverts to its raison d’etre of ensuring confident and informed participation and a continually improving financial system.

“To get to those lofty and important ambitions, you need a market that is trusted. It’s about confidence. I’ve been in markets most of my career and it’s about confidence, therefore when we approach how we think about regulation and our responses, we have that very front of mind,” Constant told audience members.

ASIC has previously elaborated on the many enforcement actions at its disposal, including fines and penalties, disqualification orders and bannings, stop orders, and in some of the most severe cases, criminal proceedings.

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According to the commissioner, the impact on market integrity remains important when ASIC determines its proportionality of response or regulatory tool to use.

“It goes to this harm question. So as a commission, we evaluate the degree of harm. Harm can be in terms of confidence in that market integrity. It can be in terms of looking at an issue that seems systemic - it may be one issue, but it may be repeated and repeated by an entity at scale and I have been at entities where system issues where repeated and it was a systemic issue, [like] some of the things that came forward in the Royal Commission,” she explained.

“We also think about the conduct leading in and after becoming aware of the event, the harm, the notification. [We] look at all our evidence and then consider all that and the question of public benefit.”

Constant added the regulator is “in court every day of the week” with a view to ensuring a fair and efficient financial system.

“At the end of the day, we are a law enforcement agency and we’re in court every day of the week. Under the same Act that says we need to inform confident and informed participation, we are required to bring full force in effect of the law when appropriate,” she said.

She also delved into the commencement of the Treasury Laws Amendment (Strengthening Corporate and Financial Sector Penalties) Act in 2019, which enabled ASIC, and by extension its Market Disciplinary Panel (MDP), to pursue harsher civil penalties and criminal sanctions.

The amended law strengthened existing penalties and introduced new penalties for those who breach the corporate laws of Australia.

According to Constant, the strengthened laws helped ensure penalties from the regulator weren’t “just a cost of doing business.”

“It’s because it’s really important that there is an understanding of the opportunity, privilege, and rights you have as a participant in Australian markets. [It’s] some of the cleanest, best, most trusted in the world and really well-functioning, and with doing harm to the integrity of that market, you have to have significant deterrents,” she said.

Constant added: “It cannot be that certain institutions can say it’s a cost of doing business, and I think there’s been a real maturity in the sector in understanding that.”