ASIC reinforces its regulatory empowerment shopping list

Mike Taylor

Managing Editor/Publisher, Financial Newswire

9 December 2025

The Australian Securities and Investments Commission (ASIC) has reinforced the legislative reforms it wants the Government to deliver out of the collapse of the Shield and First Guardian funds.

In a follow-up submission to the Parliamentary Joint Committee on Corporations and Financial Services, ASIC has outlined the areas of law reform it believes members of the committee should receive, with the ability to crack down on lead generators and financial advisers at the top of the list.

ASIC outlined the following as “areas of weakness in the system where the Committee may wish to consider potential reforms:

(a) lead generators and associated financial advisers

(b) super switching practices

(c) duties of superannuation trustees

(d) regulation of managed investment schemes.

But ASIC’s desire for more legislative/regulatory empowerment goes further than that, with the regulator telling the committee that it had raised the following issues in other forums:

(a) whether the proposed unfair trading prohibition should include financial services and products,

(b) whether the definition of retail client in s 761G of the Corporations Act 2001 remains appropriate

(c) whether ASIC should be given additional powers and access to additional data to supervise the managed investments and superannuation sectors

(d) whether there should be any limits on the range and nature of investment products (including managed investment schemes) that can be offered to retail clients.

Many of the issues on the ASIC wish list such as the wholesale/retail investor test have been the subject of proposals for legislative change over the past five years but failed to gain traction with the Government at the time.

The ASIC submission makes clear that the regulator sees a pressing need for tighter regulation of the Managed Investment Schemes (MIS) regime echoing the views of its chair, Joe Longoe that the area is under-regulated.

“The Australian managed investment scheme regime is relatively open and liberal by international standards. Australian regulations mandate that an appropriately licensed entity operates the scheme, and that adequate disclosures of the nature, benefits and risks of the scheme are made to enable their offer to retail investors,” it said.

Referring to the existing licensing regime it oversees for MISs, ASIC said its “experience is that the current scheme registration process is of limited effectiveness”.

“We have not observed a clear link between the quality of scheme documents and the governance and compliance practices of the responsible entity. Further, as scheme documents may be amended at any time after registration, the requirement for ASIC to check conduct a basic assessment of scheme constitutions and compliance plans does not ensure a material reduction in consumer harm,” it said.