Australian superannuation trustees have revised and strengthened internal policies and procedures after surveillance by ASIC last year found “significant deficiencies” late last year.
In October, ASIC reported that it had identified conflicts of interests after looking at a sample of 23 trustees and their conduct during “increased market volatility” on the back of the COVID-19 pandemic due to concerns that fund executives were using price-sensitive valuation information for personal gain.
The conflicts of interest identified by ASIC included a failure to identify investment switching as a risk, disparity in board-level engagement, and a lack of restrictive measures to limit executives’ ability to switch investment options.
“Recognition of the importance of consumer protection in financial services has meant that financial advice is specifically regulated.
“So, accepting that the use of technology has the potential to improve financial inclusion and develop people’s financial capabilities, how can we best ensure that these services are effectively provided in compliance with our laws?”
That’s where regtech comes in.
“It strikes me that this is an area where regtech has a real place,” Ms Armour said.
She questioned, however, whether regtech is adapting fast enough to provide solutions to these global regulatory trends before they become local problems.
“Financial technology has typically been developed to solve frictions in the system.
“Is regtech exploiting these opportunities to solve frictions early enough in the regulatory lifecycle?”
Last month, ASIC released Information sheet 269 to provide clarity on how the law applies to social media influencers and the licensees who use them.
The new guidance outlined activities where influencers may contravene the law if they are unaware of their legal requirements, considerations they should take, and also guidance for licensees who are engaging with influencers, with ASIC warning: “If we see harm occurring, we will take action to enforce the law.”
Dr Angel Zhong – who is a senior lecturer in finance in the school of economics, finance and marketing at RMIT University – applauded the move by ASIC, after a research by the university found that financial information consumed online influenced investment decisions.
“Unverified investment advice is no different to fake news, which is frequently flagged by social media platforms that urge viewers to read with caution,” Dr Zhong said.
“Newbie investors are particularly susceptible to receiving dodgy financial advice, as the internet replaces traditional outlets like accredited financial advisers.
“With the goal of protecting the financial wellbeing of investors, especially the young and inexperienced ones, ASIC can consider conveying the messages to young investors who rely heavily on finfluencers.
“ASIC will need to do this in a fun and engaging way by using social media, just as the finfluencers attract their large audiences,” she added.
