The Australian Securities and Investments Commission (ASIC) warns it will keep an even closer eye on signs of excessive risk culture in the financial sector.

Additional government funding of about $121.3 million over the next four years will increase surveillance capabilities, according to the regulator’s annual report.

“Our work in [this financial year] will continue to focus on culture as a key driver of gatekeeper conduct,” Chairman Greg Medcraft says.

“A positive culture – at both firm and industry level – is central to investor trust and confidence.

“The additional funding support over the next four years… will enable us to expand our abilities as a law-enforcement agency to better detect, understand and respond to misconduct.

“It will also allow us to take on more proactive surveillances at both the individual firm and industry level – within the financial advice, superannuation and managed funds, credit and insurance sectors.”

ASIC will set aside about $57 million to increase its enforcement and monitoring activities on financial advice, life insurance, breach reporting and responsible lending.

The regulator completed 152 high-intensity surveillances of the insurance, consumer banking and consumer credit sectors last financial year, and 75 cases featured failures to comply with conduct obligations.

ASIC has not named or revealed the number of insurers among the 75 cases.

“Our work focused on promoting responsible lending practices and addressing the sale of inappropriate products to consumers,” ASIC says.

“It is critical that lenders and insurers do not put consumers into unsuitable products that could put them at risk of experiencing substantial financial hardship and undermine investor and consumer trust and confidence in the financial system.”

The regulator will publish another report this financial year addressing add-on products offered by general insurers, which rated dismally in an earlier review.

Add-on insurance sold through car dealerships, in particular, often fails to meet clients’ needs and is too expensive.

“Some consumers agreed to buy add-on insurance products when they were unaware of the cover offered or even the premium,” ASIC says.

“The sales process inhibited good decision-making by consumers.”