Like fellow regulator the Australian Prudential Regulation Authority, the Australian Securities and Investments Commission (ASIC) is taking a much harder line on compliance. The business regulator says in its new annual report that it’s no longer reluctant to use all its powers to ensure corporate Australia toes the line.

The report – the last by retiring Chaiman David Knott – was tabled in Parliament last week. He says that over the past year ASIC focused on enforcement and subsequently put record numbers of individuals behind bars. “These measures have been critical to the restoration of investor confidence and to the good reputation of the Australian equities market,” he said.

“Enforcement is an essential part of regulation,” Mr Knott said. “ASIC has responded strongly to Australia’s corporate failures and market abuses, including insider trading.”

During the financial year the regulator jailed 29 corporate criminals, making a total of 73 imprisonments over the past three years. The jail terms arose from ASIC investigations which led to 43 cases run by the Commonwealth Director of Public Prosecutions. The figure is substantially larger than the 19 individuals jailed in 2001/02.

So far in 2003 ASIC has undertaken 67 civil proceedings resulting in orders against 151 people or companies. These actions resulted in recoveries and compensation of $121 million, with a further  $2 million frozen. While the regulator took 81 civil proceedings last year it only recovered $65 million and $45 million frozen.

“ASIC also launched new initiatives targeting insolvency, financial reporting and disclosure, and secured additional budget funding to develop them,” Mr Knott said.

The annual report also shows more consumers turning to ASIC for advice and assistance. Visits to its consumer website FIDO rose almost 80% per cent and public reports of misconduct rose almost 20%. Database searches had a massive increase from 6.1 million to 11 million.

ASIC granted more than 1400 approvals to facilitate commercial transactions and reduce business costs. It also fined or banned 16 people from directing companies, and banned 39 people from offering financial services.

This year the regulator also disciplined eight company auditors and liquidators for misconduct and obtained 311 additional disclosures to the market, in prospectuses or product disclosure statements.

The financial planning industry was an obvious target following the release of the infamous “shadow shopping report” on financial planners conducted in collaboration with the Australian Consumers Association. About 50% of the submitted financial plans received ratings of borderline or below, sparking a vicious media onslaught. As a consequence, ASIC conducted 803 compliance checks of financial advisers and financial product issuers to test compliance with legal requirements.