The corporate regulator will step up its monitoring of offshored outsourcing arrangements and how licensees utilise AI, as part of its corporate plan for the next financial year.
ASIC will unveil its plan this morning, including a review of how financial advisers, as well as investment managers, manage the risks of using offshore service providers, and it will publish resources to help licensees improve the security of client data that is being sent offshore.
“In particular, we will look at how they manage risks related to technology, data sharing and privacy,” the report said.
ASIC will also continue to review how retail financial services and credit entities use AI and advanced data analytics, as well as making contributions to the development of AI-specific regulations by the government.
The Delivering Better Financial Outcomes reform process will continue to be a priority, but in addition to implementing final changes through guidance and legislative instruments, ASIC will also continue to provide input into the reforms.
Under the reportable situations regime – colloquially known as breach reporting – ASIC surveillance will target licensees with low numbers of reportable situations and “take enforcement action”.
The regulator has long been critical of a lack of industry response to the regime, with by far the most reports made by larger licensees.
ASIC will produce a short report on a review of direct sales of life insurance, focusing on “low-value products” and will engage with “identified entities”.
But while risk and governance factors for advisers are namechecked in the report, ASIC will retain a strong focus on retirement outcomes. It will continue with its quality of advice in SMSFs review flagged earlier this year, but much of the scrutiny will be on APRA-regulated counterparts.
The regulator says it will continue to monitor the progress made by super funds on the Retirement Income Covenant, further stating it will take action “as appropriate” when poor conduct is discovered, after spending the past two years berating the industry for inaction.
The regulator plans to keep a keen eye on misconduct in the super sector, including the provision of services to members and harms that arise from complaints handling and claims handling. Part of this will be a continuation of the regulator’s multi-year project of reviewing compliance with laws that govern the function of contact centres and trustee administration practices.
ASIC says it will soon compete its surveillance of death benefit arrangements, and expects to take enforcement or other regulatory action. The regulator had confronted the largest super funds in the country on this topic at last week’s Conexus Retirement Conference, hosted by the publisher of Professional Planner.
ASIC will also continue its anti-scam enforcement activity, which has been a core focus during Minister for Financial Services Stephen Jones’ tenure, as well targeted enforcement against cold-calling super switching models that result in the inappropriate erosion of superannuation – an issue that led to controversial comments by the Super Members Council bemoaning the conduct of “dodgy advisers”.
