“There are many ideas under consideration, in various stages of evaluation, and we will have much more to say on this in due course,” the spokesman said.

Helen Bird, who sits on ASIC’s corporate governance panel and is a senior law lecturer at Swinburne University, warned the technology behind automation and AI was not ready for wide deployment within the regulator.

“It’s not very sophisticated. I don’t think it’s at a sufficient quality that we know it’s going provide good insights for ASIC,” Bird said. “It will strengthen over time, and be more accurate as a consequence. But what does that mean for the moment? It means the regulator must act with caution and not use AI exclusively until they’re confident it’s thorough. If not, cases might not get investigated that warranted proper investigation.”

Bird said it was inevitable that AI would eventually be used across all regulators because of the significant cost-saving opportunities from removing time-consuming manual tasks and reducing or redeploying staff.

“Do I think it will lead to an uptick of enforcement? That is hard to predict,” she said. “There’s no single answer to define what is a good or bad regulator.”

University of Wollongong associate professor and corporate regulation expert Dr Andy Schmulow was more critical, and said ASIC’s focus on automation was a “distraction” from its longstanding failure to act on reports of misconduct.

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“This is part and parcel of the moral bankruptcy that is now ASIC … Instead of doing their job, they are subcontracting their work and analysis to a machine,” he said.

“The problem with ASIC is not some confusing mystery – its problem is it doesn’t enforce the law. There are so many instances where ASIC has been told, ‘you don’t enforce the law’. I feel like a stuffed gramophone repeating it.”

The FRAA is an independent authority, established after the 2018 royal commission into banking and financial services, to scrutinise the effectiveness and capability of financial regulators, ASIC and the Australian Prudential Regulation Authority (APRA).

It found only 10 per cent of ASIC’s annual spending went towards technology, compared to 21 per cent for the UK’s financial regulator and 17 per cent for the US Securities and Exchange Commission, the documents state.

The report was released last year and called for a “substantial uplift” in ASIC’s technology investment and “material cultural change” to drive its digital transformation.

The FOI documents show that in March, ASIC chair Joseph Longo and deputy chair Sarah Court met authority panel members Nicholas Moore, Craig Drummond and Fiona Crosbie, as well as Treasury secretary Tim Baird, to discuss progress on the authority’s recommendations.

Talking points prepared for Longo for the meeting emphasise existing work and point to “some additional initiatives” to address the FRAA recommendations, including staff training on climate change disclosures, sustainable finance and cryptocurrency investigations.

“Overall, we are on track and are in a good position to demonstrate progress on all the relevant initiatives across the FRAA’s four recommendations. However, it will take time to complete many of our initiatives and to see more concrete outcomes from their implementation,” the document states.

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Earlier this year, Longo warned traders and investment banks against rushing to use artificial intelligence technology. He said inappropriate use of AI could create “unintended consequences” if adopted without proper controls and governance.

Liberal senator Andrew Bragg, who chairs the Senate committee examining the regulator, said ASIC’s effectiveness was at “rock bottom” and welcomed any effort to improve operations, including automation and AI.

“Their record on law enforcement is absolutely appalling. Crime goes undetected because they don’t respond to warnings,” Bragg said. “If it’s [automation] being used to improve their own systems, it’s worth trying. Things couldn’t be worse.”

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