Australian Securities and Investments Commission Act 2001 (Cth)

The Australian Securities and Investments Commission Act 2001 (Cth) establishes ASIC and sets out key parts of its powers, functions and enforcement toolkit. It also contains a major set of consumer protection rules that apply in relation to financial services.

For business owners, the Act is not just about how ASIC is set up. It is also where you find important rules on misleading or deceptive conduct, false or misleading representations, unconscionable conduct, unfair contract terms for certain financial contracts, substantiation notices, infringement notices, investigations, examinations and document production.

The Act operates in parallel with the Corporations Act. A practical way to read the split is this: the Corporations Act is a core operating framework for companies, financial products and financial services regulation, while the ASIC Act focuses heavily on ASIC itself and conduct and consumer protection in financial services. If your business is in fintech, payments, insurance, investment-related services or other regulated financial activity, you will often need to check both Acts together.

The Act is most relevant to businesses and individuals dealing with financial products, financial services, or ASIC investigations. That includes licensed providers, product issuers, distributors, advisers, intermediaries, insurers, payment businesses and some startups building finance-related products.

It can also affect businesses that use standard form contracts for financial products or financial services, including contracts with consumers and small businesses. This is important because the unfair contract terms regime in this Act is not a general rule for every commercial contract. It is specifically directed to standard form consumer contracts and small business contracts for financial products and financial services.

Directors, officers, employees and agents also need to pay attention. The Act includes provisions dealing with conduct by directors, employees or agents, and ASIC can direct notices and compulsory processes at people as well as companies.

The Act usually becomes a live issue when a business crosses from ordinary commerce into regulated financial conduct or dealings with ASIC. Common trigger points include launching a new financial product or service, advertising returns or benefits, using standard form customer terms, selling add-on insurance, receiving an ASIC notice, or being asked to produce books or information.

Another trigger point is making claims that need support. The Act allows ASIC to issue substantiation notices requiring claims to be substantiated. That means marketing teams, founders and product teams should keep records showing the basis for statements about pricing, features, savings, performance or customer outcomes.

If your business is unsure whether a product or service is a financial product or financial service, that classification question should be checked early. The Act contains definitions and application provisions, but businesses should not assume that a product is outside scope just because it is branded as software, a platform or a technology service.

Part 2 Division 2 contains the main conduct rules many businesses will encounter. These include prohibitions on misleading or deceptive conduct, false or misleading representations, unconscionable conduct in connection with financial services, bait advertising, referral selling, harassment and coercion, and certain conduct involving unsolicited financial services and cards.

For practical compliance, businesses should review the full customer journey, not just formal disclosure documents. Website copy, app screens, onboarding flows, call scripts, comparison tables, FAQs, sales incentives and post-sale communications can all create risk if they overstate benefits, hide conditions or create a misleading overall impression.

The Act also deals with misleading representations about future matters. If your business makes statements about future returns, future savings, future approval outcomes or future product performance, you should make sure there is a reasonable basis for those statements and that the assumptions are supportable and current.

Unconscionable conduct provisions are also relevant where there is pressure selling, exploitation of vulnerability, one-sided dealing conduct or unfair sales practices in connection with financial services. This is especially important for businesses selling to consumers, sole traders and smaller operators who may have limited bargaining power or financial literacy.

The Act contains a dedicated unfair contract terms regime for standard form consumer contracts and small business contracts for financial products and financial services. This is a key point for businesses using template terms. The regime is not framed as a general rule for all contracts in all sectors. It is specifically tied to financial products and financial services.

The legislation addresses what counts as unfair, gives examples of unfair terms, deals with standard form contracts, and identifies some contracts to which the regime does not apply. It also preserves certain terms, such as terms dealing with the main subject matter in the way the legislation allows, and includes court remedies to prevent and remedy unfair contract terms.

In practice, businesses should review template clauses that let the business change price or service unilaterally, terminate broadly, avoid performance, impose disproportionate break fees, shift risk through broad indemnities, or limit the customer’s practical remedies in a one-sided way. Whether a term is unfair depends on the statutory test and the contract context, so the review should be done carefully rather than by checklist alone.

If you contract with small businesses for a financial product or financial service, do not assume the regime is consumer-only. The Act expressly extends the unfair contract terms protections to small business contracts within its scope.

The Act includes a specific deferred sales regime for add-on insurance products. The table of contents shows provisions dealing with the meaning of add-on insurance products, the deferral period, prohibitions on selling or offering add-on insurance before the end of the deferral period, customer opt-out rules, a right of return and refund for products sold in contravention, and exceptions and exemptions in some cases.

This is particularly relevant for insurers, distributors and motor vehicle businesses involved in selling insurance connected with vehicle purchases or related transactions. If your business is in that chain, you should check whether the product is an add-on insurance product, whether a deferral period applies, whether any exception or exemption is relevant, and whether your scripts, timing and opt-out processes match the legislation.

The Act also includes a provision dealing with caps on commissions for add-on risk products supplied in connection with motor vehicles. Businesses in this area should check current law and any applicable ASIC material before relying on existing commission structures or sales processes.

Part 3 gives ASIC substantial investigation and information-gathering powers. The Act includes powers relating to investigations, examinations of persons, inspection of books, notices to produce books, notices to auditors and registered liquidators, notices to produce documents in a person’s possession, and requirements to disclose information in some circumstances.

For a business, the practical point is simple: if ASIC contacts you formally, identify the exact notice, the statutory basis, the deadline, the categories of material sought and who within the business holds the relevant records. Preserve documents immediately and avoid informal deletion, editing or selective production.

The Act also contains offences for non-compliance with requirements under Part 3, false information, obstruction, contempt of ASIC and concealing books relevant to an investigation. There are also provisions dealing with self-incrimination and legal professional privilege. That means responses should be organised, accurate and legally reviewed where the stakes are significant.

Directors and senior managers should make sure there is a clear internal response plan. That usually means appointing a response lead, securing records, mapping custodians, checking privilege issues, and keeping a record of what has been produced and when.

The Act provides a broad enforcement framework. The legislation includes offence provisions, declarations of contravention, pecuniary penalty orders, injunctions, actions for damages, non-punitive orders, adverse publicity orders, public warning notices, disqualification orders, redress orders for non-parties, declarations and orders dealing with unfair contract terms.

It also includes an infringement notice regime and a substantiation notice regime. These tools matter because ASIC does not need to rely on only one pathway. Depending on the conduct, it may seek information first, issue notices, negotiate undertakings where available, seek court orders, or pursue civil penalty or criminal pathways.

The Act also states that preference must be given to compensating persons who suffer damage as a result of contravention. That is a reminder that enforcement risk is not only about penalties. It can also involve remediation, refunds, contract changes, adverse publicity and restrictions on future conduct.

Because penalty settings and enforcement practice can change over time, businesses should verify the current law before relying on any specific amount or consequence.

Before acting on this page, confirm the current version of the Act and whether your product, service or contract is actually within the financial product or financial services scope of the ASIC Act. The Act contains detailed definitions, application provisions and exclusions, and those details matter.

You should also check whether another law is doing part of the work. In many real situations, the ASIC Act will need to be read together with the Corporations Act, regulations, ASIC legislative instruments, and any current ASIC guidance relevant to your sector.

If the issue is contract terms, confirm whether the contract is standard form and whether it is a consumer contract or small business contract for a financial product or financial service. If the issue is marketing, keep evidence supporting all claims. If the issue is an ASIC notice, check the exact statutory power and get advice quickly where the request is broad, urgent or sensitive.

This page is based on the compilation of the Australian Securities and Investments Commission Act 2001 in force on 19 December 2025, Compilation No. 105. The compilation notes explain that uncommenced amendments are not shown in the text of the compiled law and that modifications affecting the law may be accessible separately on the Register.

That means businesses should check the latest Federal Register of Legislation version before relying on section wording, current amendment status or any penalty setting.

Official source: Federal Register of Legislation, Australian Securities and Investments Commission Act 2001 (Cth), latest compilation referenced at Compilation No. 105, in force on 19 December 2025.

Useful areas to review in the Act include Part 2 Division 2 for consumer protection in relation to financial services, unfair contract terms and related remedies, and Part 3 for investigations and information-gathering powers.