Financial Services Update: ASIC’s Report Card – key points from its annual report

ASIC’s Report Card: key points from its annual report

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In this edition:

  • ASIC’s Report Card: key points from its annual report;
  • updated guidance for credit licensees on their responsible lending obligations; and
  • AUSTRAC releases annual report for 2013-14

ASIC’s Report Card: key points from its annual report

On 29 October 2014 ASIC’s Annual Report 2013-2014 was tabled in Federal Parliament and subsequently released on ASIC’s website. The report  contains some interesting facts and figures on ASIC’s performance for the previous financial year and improvement initiatives for the future. Despite some claims in the media that ASIC is ‘a regulator that doesn’t believe in regulation‘, the statistics promoted in the report suggest otherwise.

Read on for some fast facts on ASIC for the reporting period 2013-14.

Funding and fees

  • Funding: ASIC received $347 million in government funding, $3 million less than in 2012-2013. ASIC also received $5 million in ‘other revenue’, $12 million less than in 2012-13. Less funding was received for investigating regulatory breaches, and an increase in operational costs was reported. The Companies Unclaimed Monies Special Account was abolished in December 2012.
  • Revenue: ASIC raised $763 million in fees and charges for the Commonwealth, an increase of 6% from 2012-13. According to the report, the increase in revenue is due to an increase in new companies being registered, an increase in Business Names revenue and fee indexation of 2.5%.
  • Expenses: ASIC spent $405 million, down 1% from 2012-13. The decrease is due to a lack of expenditure for investigations.



  • secured 32 criminal convictions and 14 imprisonments;
  • cancelled or suspended 23 Australian Financial Services Licences (AFSLs) and 6 AFSL holders agreed to have conditions imposed on their AFSLs;
  • permanently banned 20 individuals from providing financial advice and 2 agreed to stay out of the industry permanently;
  • recovered $50 million in compensation or remediation for investors including intervening in court-approved settlements for members of class actions against Storm Financial and Macquarie Bank;
  • was involved in securing over $122 million in refunds or compensation to almost 300,000 consumer accounts due to overcharged interest or fees; and
  • commenced proceedings against GE Capital Finance Australia (GE Money) for false or misleading representations to more than 700,000 of its credit card customers, leading to the Federal Court imposing a penalty of $1.5 million.

Engagement with industry and stakeholders

ASIC’s engagement with industry bodies and stakeholders included:

  • 487 meetings with a broad range of industry groups such as the Stockbrokers Association of Australia and the Governance Institute of Australia; and
  • collaboration with international counterparts to secure recognition of the application of Australian laws in foreign jurisdictions including the European Commission proposing that it would recognise Australia’s regulatory regime for central counter-parties as sufficiently equivalent to the EU regime.

Customer contact


  • responded to over one million calls and online enquiries; and
  • handled 911,447 calls – a 27% increase from last year.

New company registration:

ASIC registered 212,573 new companies, an increase of 10.6% from last year.

Fair and efficient markets


  • either stopped, or improved disclosure on, 141 prospectuses, including extending the exposure period on 53 prospectuses;
  • monitored 57 new takeover bids and intervened to seek better disclosure or conduct; and
  • disqualified 60 directors from managing corporations through administrative action.

Misconduct reports from the public

ASIC encourages members of the public to report their concerns about financial services misconduct to them. In 2013-14 ASIC dealt with 10,530 reports of alleged misconduct, 9% fewer than in 2012-13. According to ASIC, this number is back on a level it experienced before the global financial crisis.

Improved website

And finally, if you haven’t noticed already, ASIC has revamped its website,

Updated guidance for credit licensees on their responsible lending obligations

In August this year the Federal Court handed down its first decision on the responsible lending obligations under the National Consumer Credit Protection Act 2009 (Cth) (National Credit Act) – see ASIC v The Cash Store (in liquidation) [2014] FCA 926 (ASIC’s case summary is available here). The Court found that The Cash Store Pty Ltd (TCS), and its loan funder Assistive Finance Australia Pty Ltd (AFA), failed to comply with their responsible lending obligations in relation to their customers, the majority of whom were on low incomes or in receipt of Centrelink benefits.

The contraventions are alleged to relate to 325,756 credit contracts that TCS arranged, and AFA financed, between 1 July 2010 (when the relevant provisions of the National Credit Act became operative) and 24 September 2012. Due to the volume of contracts involved, only 281 were used in the proceedings.

The decision makes it clear that credit licensees must, at a minimum, inquire about the consumer’s current income and living expenses to comply with their responsible lending obligations. Further inquiries may be needed depending on the circumstances of the particular consumer with Justice Davies noting that ‘the extent to which further information and additional inquiries may be needed in order to assess the consumer’s financial capacity to service and repay the proposed loan and determine loan suitability will be a matter of degree in each particular case’.

In this case, sales of consumer credit insurance by TCS were looked upon very dimly by Justice Davies, who said they were ‘characterised by moral obloquy and the opprobrium of unconscionability’. The matter is listed for a penalty hearing on 15 December 2014.

As a result of this decision, ASIC has updated Regulatory Guide 209 Credit licensing: Responsible lending conduct, incorporating the general findings of the Federal Court on the responsible lending obligations for credit licensees. In particular, RG 209 provides further examples of what may constitute ‘reasonable inquiries’ about a consumer’s financial situation (see RG 209.32 onwards).

RG 209 has also been amended to clarify the existing guidance, as well as the removal of some material that ASIC considers to be repetitive or no longer necessary.

AUSTRAC releases annual report for 2013-14

AUSTRAC, Australia’s anti-money laundering and counter-terrorism financing regulator, has released its annual report for 2013-14, after it was tabled in Parliament on 17 October 2014.

Perhaps the most astounding information contained within the report is the sheer volume of information being received and processed by the regulator. A whopping 91 million reports of financial transactions were received from reporting entities, largely relating to reports of international funds transfers with a combined value of almost $4 trillion.

Suspicious matter reporting figures were also provided in the report. Whilst all AML/CTF Programs should contain documented procedures outlining suspicious matter reporting requirements, it was interesting to see how many reports were actually submitted. AUSTRAC confirmed that more than 60,000 suspicious matters were received during the year with entities submitting reports for a range of reasons. This included unusual activity associated with an account, customers attempting to avoid reporting obligations and perceived risks associated with a country involved in the transaction.

How CompliSpace can help
Australian Financial Services Licence holders are inundated with a raft of corporate governance obligations and an ever-growing compliance burden, that can distract focus away from core business activities.

CompliSpace provides industry-specific policies, programs and procedures to ease the burden of compliance.

Our compliance and corporate governance solutions include Whistleblower, AFSL, AML/CTF and other industry-specific compliance programs.

Contact Details
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This blog is a guide to keep readers updated with the latest information. It is not intended as legal advice or as advice that should be relied on by readers. The information contained in this blog may have been updated since its posting, or it may not apply in all circumstances. If you require specific or legal advice, please contact us on 1300 132 090 and we will be happy to assist.

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