The Australian Securities and Investments Commission (ASIC) must forge a tighter relationship with the industry it regulates if it is to improve effectiveness of its regulation, according to CPA Australia and Chartered Accountants Australia New Zealand.
In its submission to the Senate Economic Committee’s inquiry into the Scrutiny of Financial Advice, the two groups said there is presently no regular forum between ASIC and the financial planning industry it monitors.
“Given the reality of limited resources and the size of the industry it is responsible for overseeing, ASIC is missing an opportunity to leverage of this invaluable resource and improve the effectiveness of its regulation and monitoring,” the groups said in its submission.
ASIC used to formally and frequently consult with financial services industry, representatives and professional associations, which acted as an avenue for licensees and associations to put forward issues and clarify on certain topics.
But the groups said this no longer exists.
The submission also argued that while raising education standards in light of the recent financial planning scandals at the Commonwealth Bank and Macquarie Bank is good, it is not the “panacea” to solve the problems facing the industry.
“Education in itself does not change behaviour or culture. There have been instances where very smart and technical financial advisers have provided inappropriate advice.”
The groups argue against a a “piecemeal” or short-term solution and instead propose establishing a professional standards framework and a statutory code of conduct to regain consumer trust.
