ASIC outlines new focus in 2023: Greenwashing, cyber resilience, scams, crypto

Rick Steves

“In the final three months of last year we commenced a number of significant enforcement and regulatory actions to address misconduct, market integrity threats and consumer harms in sectors including financial services, retail and crypto-assets.”

The Australian Securities and Investment Commission has released its latest enforcement and regulatory report, highlighting actions taken during the last three months of 2022, and outlining the full list of enforcement priorities for the year ahead.

The report provides a clear path in regard to ASIC’s upcoming enforcement actions, which will mostly target greenwashing, predatory lending, and misleading insurance pricing promises.

The goal remains the same: to protect consumers from financial harm.

Enforcement in sectors including financial services, retail and crypto-assets

ASIC Deputy Chair Sarah Court said: “In the final three months of last year we commenced a number of significant enforcement and regulatory actions to address misconduct, market integrity threats and consumer harms in sectors including financial services, retail and crypto-assets. This includes corporate governance and directors’ duties, product design and distribution, and misleading statements involving sustainable finance practices.

“We take our role to protect consumers and investors seriously and won’t hesitate to take action to protect consumers where we identify poor conduct. We will also remain focused on helping industry to meet their legal obligations including by providing simple, effective and easy-to-access guidance.”

ASIC will dedicate 2023 to enforcement activity targeting sustainable finance practices and disclosure of climate risks, financial scams, cyber and operational resilience, and investor harms involving crypto-assets.

While this information sheet focuses on sustainability-related products issued by funds, its principles may apply to other entities that offer or promote financial products that take into account sustainability-related considerations. Examples include companies listed on a securities exchange or entities issuing green bonds.

Greenwashing raises concerns as firms flock toward ESG investing

In relation to investments, ‘greenwashing’ is the practice of misrepresenting the extent to which a financial product or investment strategy is environmentally friendly, sustainable or ethical.

Greenwashing distorts relevant information that a current or prospective investor might require in order to make informed investment decisions. It can erode investor confidence in the market for sustainability-related products and poses a threat to a fair and efficient financial system.

There has been an increase in investor demand for, and the availability of, sustainability-related financial products in the Australian market. With this comes a growing risk of greenwashing and, as a result, investors being confused or misled.

In 2022, the financial watchdog explained how to avoid greenwashing when offering or promoting sustainability-related products.

“It is therefore important that issuers comply with existing requirements when promoting or offering sustainability-related products. Such requirements include the prohibitions against misleading and deceptive statements and conduct, as well as disclosure obligations”, said the announcement.

“To help improve the quality of disclosure, ASIC recognises the recommendations by the Financial Stability Board’s Task Force on Climate-related Financial Disclosures (TCFD) and encourages voluntary disclosure that is in accordance with the TCFD framework. If you report climate-related information under the TCFD framework, we expect that you will be well placed to transition to any future standard.

“This is an evolving space and there have been significant developments recently in relation to disclosure standards for sustainability-related products. For example, in March 2022, the International Sustainability Standards Board published proposed standards on climate-related disclosures and general sustainability-related disclosures.

“You should keep up to date with developments in the regulatory setting and consider how you can improve your disclosures in light of those developments”, said ASIC.

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