ASIC's new chief enforcer could oversee major credit shakeup

Scott Gregson has pursued high-profile actions as head of ACCC

ASIC's new chief enforcer could oversee major credit shakeup

The Australia Securities and Investment Commission (ASIC) has hired a lifelong enforcer to lead the financial watchdog with the appointment of Scott Gregson.

Gregson, who will take the reins on 17 March in place of outgoing interim chief executive Greg Yanco, has spent three decades at the Australian Competition and Consumer Commission (ACCC), most recently as chief executive.

During his leadership at the ACCC, Gregson pursued high-profile enforcement actions against major corporations, including civil proceedings against the likes of Volkswagen, Coles and Apple.

As an esteemed regulatory enforcer, the financial services sector will be closely watching how he will balance ASIC’s mandate while maintaining a robust free market.

ASIC chair Joe Longo (pictured below) believes Gregson is up to the task.

“Scott is an impressive leader and will bring extensive experience to this important role at ASIC,” Longo said: “His commitment to achieving regulatory outcomes that benefit all Australians makes him a strong addition to support ASIC’s commission and head the agency’s executive leadership team.”

But dealmakers in the credit space will be eager to see if Gregson heaps further burdens on a sector that is still reeling from persistently high interest rates and the lingering effects of the cost-of-living crisis.

While ASIC is not directly involved in determining monetary policy, the regulator has deep legislative and policy influence which can strongly influence the act of lending out money to those who want it.

Increasing influence

ASIC oversees the National Consumer Credit Protection Act (NCCP Act), which mandates responsible lending practices while enforcing transparency in the marketing and disclosure of financial products. Introduced in 2009, the NCCP substantially increased ASIC’s role in the financial markets.

Following the 2019 Royal Commission into banking misconduct, ASIC introduced the Best Interests Duty.

The key tenets of the Best Interest Duty are for brokers to act in the best interests of their consumers. It requires them to prioritise their consumers’ interests when providing credit assistance under the “conflict priority rule”.

These and other regulatory guidelines are important for maintaining consumer protection, but extensive regulatory oversight can also impact borrowers’ ability to access funds. The sweet spot for regulators of all types is to balance these protections without stifling economic progress.

ASIC intends to upgrade certain regulatory guidelines surrounding conflicts of interest, codes of conduct and the disclosure and marketing of financial products this year.

Given Gregson’s enforcement background, there is a strong possibility that ASIC intends to get even tougher than it already is.

What should we expect?

There is “a lot of curiosity about what’s next” when Gregson takes over in March, said Jean-Pierre Gortan, co-founder and managing director of Simplicity Loans & Advisory. 

“Coming from the ACCC, where he focused heavily on enforcement and consumer outcomes, Gregson seems like the kind of leader who’ll push for stronger compliance and more proactive regulation,” he told MPA.

Gregson is expected to keep cracking down on misconduct through the use of technology to improve surveillance, which is something ASIC has been bullish on for a while, Gorton said.

“What people hope to see, though, goes beyond just enforcement,” Gorton said. “There’s a real opportunity for Gregson to address some tricky issues, like conflicts of interest in broker commissions and the need for clearer, more transparent disclosures for consumers.

“The private lending space is another area where he’ll need to tread carefully. While private lenders play a crucial role, some are creating products that skirt around NCCP rules.”

In one high-profile instance, ASIC launched legal action against Oak Capital Mortgage Fund and Oak Capital Wholesale Fund for allegedly issuing 47 loans totalling over $37 million using a model allegedly designed to bypass the NCCP.

Gortan is also curious to see if Gregson is willing to drive cultural change within ASIC itself, stating: “Stronger collaboration with industry bodies could strike a balance between strict oversight and practical regulation.

“Ultimately, the hope is that Gregson can drive consumer protection but also fostering innovation, making the financial space fairer and more resilient for everyone.”

The stakes are high if Gregson gets it wrong.

“If (ASIC) changes the way we do business in commercial, it’s going to have a detrimental effect on the Australian economy,” said Gortan. “I would hope they go along with the status quo, but it is always a risk whenever someone comes into a new job and says ‘OK, what am I going to do differently?’”