ASIC smoking with a Hallelujah moment

Outsider has some good news for financial planners and others regulated by the Australian Securities and Investments Commission (ASIC) — the regulator's deputy chairman, Peter Kell has admitted madly wasting money and resources.

That's right, according to Kell ASIC was guilty tinkering without achieving a great deal right up until it got a wake-up call as result of the global financial crisis.

This rare piece of honesty from Kell came in an address to a Brisbane symposium dealing with the Impacts of Behavioural Economics on Financial Markets during which Kell admitted that ASIC had spent far too long pursuing madly pursuing a disclosure regime and wondering why its efforts weren't working.

"They say the definition of insanity is doing the same thing over and over again and expecting a different result. That's where we were in retail financial regulation. We were tinkering so much we risked going insane! We were wasting money and resources — including the resources of industry participants, who were producing large amounts of disclosure documents — while failing to fix market problems."

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But taxpayers and the Federal Treasurer, Scott Morrison need not worry. ASIC has apparently beaten its disclosure addiction by weening itself onto behavioural economics.

Outsider was ever so gratified to hear Kell state that one of the key lessons that resonates with ASIC is from David Halpern, who set up the British ‘Nudge Unit' within Downing Street and now runs the Behavioural Insights Team.

That lesson is apparently to have humility and to accept that "we won't always know in advance what interventions will work, and at times some policy actions may have perverse outcomes".

Regulatory oversight can clearly be addictive.