1. ASIC Faces 5 Key Challenges 2016-20
Aligning conduct in a market-based system with investor and financial consumer trust and confidence
Digital disruption and cyber resilience in our financial services and markets
Structural change in our financial system, which is being driven by growth in superannuation
Complexity in financial markets and products driven by innovation
Globalisation of financial markets, products and services

2. Behaviour
Behaviour – of both investors and gatekeepers – has a significant influence on investor outcomes in the financial system.
Investor and consumer behaviour is driven by behavioural biases and financial literacy – including knowledge, skills and attitudes
Gatekeeper behaviour is driven by:-
Culture
Incentives such as remuneration structures, and
Deterrence – the risk and impact of gatekeepers getting caught for misconduct

3. What is culture?
Culture is a set of shared values or assumptions that reflect the underlying mindset of an organisation
Culture represents the “unwritten rules” for how things really work in the organisation
From a legal perspective, the Criminal Code defines culture as including attitudes, policies, rules and course of conduct or practice

4. Why does culture matter?
Culture is a driver of poor conduct within the financial sector (the ‘culture/conduct nexus’)
Bad conduct is bad for business:-
- Macro-level considerations: poor conduct impacts on the integrity of the Australian financial markets, eroding investor trust and confidence
- Individual business considerations: poor conduct can lead to misconduct, resulting in significant financial costs

5. Why drives culture? We think there are 7 key drivers of culture:-
Tone from top
Cascading to the rest of the organisation
Translating into business practices
Accountability
Effective communication and challenge
Recruitment, training and rewards
Governance and controls

6. Projects for this financial year and next
Accountants’ limited licences
Testing FOFA obligations
Further work on large institutions
Life insurance
Insurance in super
SMSF advice
Member experience project

7. Innovation Hub ASIC established an Innovation Hub in April 2015
The aim of the Hub is to help fintech start-ups navigate the regulatory system we administer
Provides innovative start-ups with informal assistance throughout the early stages of their development
Consultation Paper 260 Further measures to facilitate innovation in financial services

8. Digital Advice
Digital advice or ‘robo-advice’ is the provision of automated financial product advice using algorithms and technology without the direct involvement of a human adviser. This includes combined or hybrid advice models
ASIC supports the development of a healthy and robust digital advice market in Australia
ASIC has liaised with approximately 30 entities who provide digital advice or who propose to provide digital advice
Regulatory Guide 255 Providing digital financial product advice to retail clients

9. Key issues in digital advice
The law is technology neutral and the obligations applying to the provision of traditional (ie. non-digital) financial product advice and digital advice are the same
Minimum expectations for digital advice providers offering scaled advice
How digital advice providers can meet the minimum training and competence standards for advisers
Adequate processes in place to monitor and test the algorithms underpinning the advice being provided