In a report released last week on Wednesday, (REP 778: Review of Online Trading Providers), ASIC has highlighted its observations from its surveillance of online trading providers. ASIC is concerned about the potential risks associated with online trading, including investment hype, inadequate supervision, misleading statements, and the use of digital engagement practices such as #influencermarketing.
ASIC has taken a proactive approach to supervising online trading providers, and has assessed the practices, business structures, and product offerings of a range of providers. In one case, ASIC took action against an online trading provider that was making misleading statements about its products and services.
ASIC's intervention is a timely reminder that online trading providers must ensure they are meeting their licensee obligations instead of implementing a “set and forget” approach to compliance.
Here are some key reminders for placing compliance and risk management at the forefront of your business practices:
Ensure that your Australian Financial Service Licence truly reflects your business activities. If there are any gaps, you will need to vary your licence by submitting an application to ASIC.
Maintain adequate financial resources. Ensure that you have sufficient capital to cover liabilities and operate your business effectively, including any additional financial requirements that are applicable to you as a licensee.
Identify, assess and manage the risks associated with your business.
Have adequate internal controls and compliance systems.
Act with honesty and fairness and handle complaints efficiently and fairly.
Regularly report to ASIC and respond promptly to ASIC inquiries and investigations.
By following these tips, you can ensure that you uphold best practice whilst continually scaling and innovating your business. Compliance and risk management does not need to be daunting. Having the right attitude, the right team and strong service providers will get you where you need to be. At McCarthy Durie Lawyers, we have a team of lawyers and consultants that can help.