Australia: The six phases of an ASIC investigation - and how you can be prepared

Clayton Utz Insights
Last Updated: 11 February 2015
Article by Randal Dennings

Key Points:

If you understand how an ASIC investigation is likely to proceed, you can be better prepared and can ensure any investigation will run as smoothly, and with as little disruption to your business, as possible.

In the environment of investigations by a regulator, such as ASIC, while it may seem like a regulatory whirlwind to the uninitiated, it is generally possible to identify a few key phases over the course of the matter. If you understand how an ASIC investigation is likely to proceed, you can be better prepared and can ensure any investigation will run as smoothly, and with as little disruption to your business, as possible.

Phase 1: pre-investigation and preventive action

Proactive Governance, Risk and Compliance (GRC) practices and rigorous monitoring and supervision of those practices may assist in limiting the scope of regulator investigations or avoid investigations altogether.

What you should do now

  • Review your existing GRC advice framework to identify gaps and to help develop more effective GRC advice frameworks.
  • As part of your preparation for regulator surveillance/investigations, undertake file reviews through the prism of a regulator's perspective to identify areas for improvement or challenge.
  • Prior to undertaking significant changes to offerings in products and or organisational distribution lines, seek advice on legal requirements and interpretation, and provide feedback on peer and regulator risk appetite in these areas
  • Conduct mock surveillances/investigations.
  • Undertake a legal risk assessment.
  • Review the adequacy of controls.
  • Review insurance policies to determine, or take advice on, whether they will respond effectively to regulatory investigations and their consequences, and assist with negotiation of changes to wordings.

Phase 2: ASIC identifies its concerns

Enforcement action undertaken by ASIC may be triggered by a complaint from a customer/client, routine ASIC surveillance, referral from another regulator or a report to ASIC (such as a breach report under section 912D).

A critical step during this phase may be the voluntary remediation steps undertaken by a licensee and/or loss mitigation steps in response to ASIC's concerns (to the extent these concerns are known). In our experience, these initial steps can be critical in future negotiations with ASIC during an enforcement stage.

What you should do now

  • Understand the scope of the ASIC notices and the appropriate response.
  • Ensure any documents to be submitted to ASIC are reviewed to confirm they are within scope and to identify any possible issues.
  • Ensure claims of privilege are made over any relevant documentation.
  • Understand your obligations under your insurance policy and the need to notify insurers of an ASIC investigation, the form of insurance notification and the appropriate time to lodge notification. The need to notify under your insurance policy should be monitored closely and legal advice sought where you are uncertain.
  • Instruct lawyers to undertake a preliminary review of your advice processes, procedures and guidelines and to advise on the immediate remediation steps which can be taken while ASIC investigations are progressing. This will help in negotiations with the regulator and ensure you meet your general obligations to act honestly, efficiently and fairly.
  • Consider any possible immediate remediation steps including improvements to GRC advice frameworks, client remediation and disciplinary action.

Phase 3: ASIC initiates formal investigation

ASIC makes a determination that the concern warrants a formal investigation. During this phase, ASIC may also call for meetings with the licensee, issue notices for information (or further notices where the investigation is triggered by surveillance), may seek formal responses on certain issues raised by ASIC relating to its concerns, may seek responses in the form of detailed reports and/or may seek to hold formal examinations with key persons of interest. This stage is critical and how this is managed will invariably set the tone for your future engagement with ASIC.

What you should do now

  • Instruct lawyers to review the issues which are the subject of investigation (as with any other legal advice, your communications with and advice from the lawyers will be subject to legal professional privilege).
  • Understand the scope of any further notices and develop an appropriate response.
  • Ensure that any documents to be submitted to ASIC are reviewed to confirm they are within scope, any possible red flag issues are identified, and to assert any available claims for privilege.
  • Understand your obligations under your insurance policy to notify insurers of an ASIC investigation, including the form of notice and timing of notification.
  • Attend formal examinations and prepare for formal investigations.

Phase 4: independent review of client files

As part of its investigations or requirements on licensees to address ASIC's concerns, ASIC may request the licensee to arrange for an independent review of its client files. This may be agreed to voluntarily, through an administrative arrangement, or pursuant to an enforceable undertaking. While such a review would generally form part of the investigation or enforcement phase, there are some specific matters that need to be taken into account when the ASIC investigation involves reviewing client files.

What you should do now

  • Instruct your lawyers to coordinate the review so that where possible, advice sought and provided in relation to it is protected by legal professional privilege.
  • Engage an appropriate independent expert.
  • Develop terms of reference for the review.
  • Develop or advise on the appropriate template or framework for the client review.
  • Seek legal advice on whether any issues identified are likely to be a breach of relevant legal obligations such as the "best interests duty" or other legal obligations.
  • Make any notifications to insurers of any potential individual claims arising out of an independent client review, and submit insurance claims under relevant policies.

Phase 5: enforcement/negotiating an administrative outcome

ASIC has a number of powers which it may exercise, including enforcement remedies (such as penalties, banning orders and prosecution), protective action (such as revocation or suspension of licence, bans, public warnings), preservative action (such as an injunction), corrective action (such as further corrective disclosure to consumers), compensation, negotiated resolutions (such as administrative arrangements or enforceable undertakings) and infringement notices.

ASIC may, for example, seek that the licensee agree to an administrative or regulatory outcome to remedy the misconduct or breach.

In determining the appropriate remedy, a key consideration for ASIC will be the extent of harm or loss to investors or consumers.

What you should do now

  • Respond to enforcement action and understand the terms of any administrative or regulatory outcomes (such as an enforceable undertaking).
  • Seek legal advice on the proposed enforcement action including the terms of any administrative or regulatory outcomes (such as an enforceable undertaking).
  • Review any proposed ASIC media releases on the administrative or regulatory outcome.
  • Prepare client communications.
  • Lodge your insurance claim.

Phase 6: post-investigation

A licensee's actions following an ASIC investigation can be just as critical as its actions during the investigation phase in ensuring ongoing compliance with legal obligations, and limiting future regulatory action.

What you should do now

  • Review the status and progress of implementation of any improvements to your GRC advice framework.
  • Implement any remediation steps agreed with ASIC, such as enforceable undertaking actions, and/or undertake any proposed or agreed independent compliance or advice reviews.
  • Ensure any further reporting to ASIC is conducted promptly and efficiently.

How we have helped other clients

Clients have reported that our involvement is not only cost-effective but helps them make the most of their expenditure in deriving value for their further governance risk and compliance efforts going forward.

Clayton Utz communications are intended to provide commentary and general information. They should not be relied upon as legal advice. Formal legal advice should be sought in particular transactions or on matters of interest arising from this bulletin. Persons listed may not be admitted in all states and territories.

To print this article, all you need is to be registered on

Click to Login as an existing user or Register so you can print this article.

Some comments from our readers…
“The articles are extremely timely and highly applicable”
“I often find critical information not available elsewhere”
“As in-house counsel, Mondaq’s service is of great value”

Mondaq Advice Centre (MACs)
Related Video
Up-coming Events Search
Font Size:
Mondaq on Twitter
Register for Access and our Free Biweekly Alert for
This service is completely free. Access 250,000 archived articles from 100+ countries and get a personalised email twice a week covering developments (and yes, our lawyers like to think you’ve read our Disclaimer).
Email Address
Company Name
Confirm Password
Mondaq Topics -- Select your Interests
 Law Performance
 Law Practice
 Media & IT
 Real Estate
 Wealth Mgt
Asia Pacific
European Union
Latin America
Middle East
United States
Worldwide Updates
Check to state you have read and
agree to our Terms and Conditions

Terms & Conditions and Privacy Statement (the Website) is owned and managed by Mondaq Ltd and as a user you are granted a non-exclusive, revocable license to access the Website under its terms and conditions of use. Your use of the Website constitutes your agreement to the following terms and conditions of use. Mondaq Ltd may terminate your use of the Website if you are in breach of these terms and conditions or if Mondaq Ltd decides to terminate your license of use for whatever reason.

Use of

You may use the Website but are required to register as a user if you wish to read the full text of the content and articles available (the Content). You may not modify, publish, transmit, transfer or sell, reproduce, create derivative works from, distribute, perform, link, display, or in any way exploit any of the Content, in whole or in part, except as expressly permitted in these terms & conditions or with the prior written consent of Mondaq Ltd. You may not use electronic or other means to extract details or information about’s content, users or contributors in order to offer them any services or products which compete directly or indirectly with Mondaq Ltd’s services and products.


Mondaq Ltd and/or its respective suppliers make no representations about the suitability of the information contained in the documents and related graphics published on this server for any purpose. All such documents and related graphics are provided "as is" without warranty of any kind. Mondaq Ltd and/or its respective suppliers hereby disclaim all warranties and conditions with regard to this information, including all implied warranties and conditions of merchantability, fitness for a particular purpose, title and non-infringement. In no event shall Mondaq Ltd and/or its respective suppliers be liable for any special, indirect or consequential damages or any damages whatsoever resulting from loss of use, data or profits, whether in an action of contract, negligence or other tortious action, arising out of or in connection with the use or performance of information available from this server.

The documents and related graphics published on this server could include technical inaccuracies or typographical errors. Changes are periodically added to the information herein. Mondaq Ltd and/or its respective suppliers may make improvements and/or changes in the product(s) and/or the program(s) described herein at any time.


Mondaq Ltd requires you to register and provide information that personally identifies you, including what sort of information you are interested in, for three primary purposes:

  • To allow you to personalize the Mondaq websites you are visiting.
  • To enable features such as password reminder, newsletter alerts, email a colleague, and linking from Mondaq (and its affiliate sites) to your website.
  • To produce demographic feedback for our information providers who provide information free for your use.

Mondaq (and its affiliate sites) do not sell or provide your details to third parties other than information providers. The reason we provide our information providers with this information is so that they can measure the response their articles are receiving and provide you with information about their products and services.

If you do not want us to provide your name and email address you may opt out by clicking here .

If you do not wish to receive any future announcements of products and services offered by Mondaq by clicking here .

Information Collection and Use

We require site users to register with Mondaq (and its affiliate sites) to view the free information on the site. We also collect information from our users at several different points on the websites: this is so that we can customise the sites according to individual usage, provide 'session-aware' functionality, and ensure that content is acquired and developed appropriately. This gives us an overall picture of our user profiles, which in turn shows to our Editorial Contributors the type of person they are reaching by posting articles on Mondaq (and its affiliate sites) – meaning more free content for registered users.

We are only able to provide the material on the Mondaq (and its affiliate sites) site free to site visitors because we can pass on information about the pages that users are viewing and the personal information users provide to us (e.g. email addresses) to reputable contributing firms such as law firms who author those pages. We do not sell or rent information to anyone else other than the authors of those pages, who may change from time to time. Should you wish us not to disclose your details to any of these parties, please tick the box above or tick the box marked "Opt out of Registration Information Disclosure" on the Your Profile page. We and our author organisations may only contact you via email or other means if you allow us to do so. Users can opt out of contact when they register on the site, or send an email to with “no disclosure” in the subject heading

Mondaq News Alerts

In order to receive Mondaq News Alerts, users have to complete a separate registration form. This is a personalised service where users choose regions and topics of interest and we send it only to those users who have requested it. Users can stop receiving these Alerts by going to the Mondaq News Alerts page and deselecting all interest areas. In the same way users can amend their personal preferences to add or remove subject areas.


A cookie is a small text file written to a user’s hard drive that contains an identifying user number. The cookies do not contain any personal information about users. We use the cookie so users do not have to log in every time they use the service and the cookie will automatically expire if you do not visit the Mondaq website (or its affiliate sites) for 12 months. We also use the cookie to personalise a user's experience of the site (for example to show information specific to a user's region). As the Mondaq sites are fully personalised and cookies are essential to its core technology the site will function unpredictably with browsers that do not support cookies - or where cookies are disabled (in these circumstances we advise you to attempt to locate the information you require elsewhere on the web). However if you are concerned about the presence of a Mondaq cookie on your machine you can also choose to expire the cookie immediately (remove it) by selecting the 'Log Off' menu option as the last thing you do when you use the site.

Some of our business partners may use cookies on our site (for example, advertisers). However, we have no access to or control over these cookies and we are not aware of any at present that do so.

Log Files

We use IP addresses to analyse trends, administer the site, track movement, and gather broad demographic information for aggregate use. IP addresses are not linked to personally identifiable information.


This web site contains links to other sites. Please be aware that Mondaq (or its affiliate sites) are not responsible for the privacy practices of such other sites. We encourage our users to be aware when they leave our site and to read the privacy statements of these third party sites. This privacy statement applies solely to information collected by this Web site.

Surveys & Contests

From time-to-time our site requests information from users via surveys or contests. Participation in these surveys or contests is completely voluntary and the user therefore has a choice whether or not to disclose any information requested. Information requested may include contact information (such as name and delivery address), and demographic information (such as postcode, age level). Contact information will be used to notify the winners and award prizes. Survey information will be used for purposes of monitoring or improving the functionality of the site.


If a user elects to use our referral service for informing a friend about our site, we ask them for the friend’s name and email address. Mondaq stores this information and may contact the friend to invite them to register with Mondaq, but they will not be contacted more than once. The friend may contact Mondaq to request the removal of this information from our database.


This website takes every reasonable precaution to protect our users’ information. When users submit sensitive information via the website, your information is protected using firewalls and other security technology. If you have any questions about the security at our website, you can send an email to

Correcting/Updating Personal Information

If a user’s personally identifiable information changes (such as postcode), or if a user no longer desires our service, we will endeavour to provide a way to correct, update or remove that user’s personal data provided to us. This can usually be done at the “Your Profile” page or by sending an email to

Notification of Changes

If we decide to change our Terms & Conditions or Privacy Policy, we will post those changes on our site so our users are always aware of what information we collect, how we use it, and under what circumstances, if any, we disclose it. If at any point we decide to use personally identifiable information in a manner different from that stated at the time it was collected, we will notify users by way of an email. Users will have a choice as to whether or not we use their information in this different manner. We will use information in accordance with the privacy policy under which the information was collected.

How to contact Mondaq

You can contact us with comments or queries at

If for some reason you believe Mondaq Ltd. has not adhered to these principles, please notify us by e-mail at and we will use commercially reasonable efforts to determine and correct the problem promptly.