The Australian Securities and Investments Commission (ASIC) chair, Joe Longo, has said the regulator will change its processes after its handling of the Sterling case.
Speaking to the Senate Parliamentary Joint Committee on Corporations and Financial Services, Longo said ASIC was changing its processes around communication of potential issues.
This followed criticism by the Senate that ASIC had acted with a “lack of concern” towards Sterling investors by failing to act promptly or proactively.
“We are looking carefully at changing some of our processes and thinking internally to be a lot more robust and expressing our views publicly in circumstances like Sterling. This is something we need to work through with our own staff to change our processes,” he said.
“We need to be more open and energetic with the community about our concerns.”
“The challenge for us is to be able to identify emerging issues and then give them the attention they need in a timely manner. That requires a review of our system and processes and the way we assess things so that we can make community expectations that we are going to respond more quickly and decisively to a problem.”
Managed investments scheme hit the news last week with the failure of the PE Capital but Longo said this was dissimilar to Sterling case as it related to commercial rather than residential tenancies.
While he acknowledged Design and Distribution Obligations (DDO) gave the regulator power to intervene, it was the right of Australians to invest in these type of products. Around 5% of Australian wealth was held in managed investment schemes.
Longo said: “The fundamental principle is that Australians have the right to invest in these registered managed investment schemes.
“We should be encouraging people to get proper advice from licenced advisers before they enter into investments of this nature, particularly where the practical effect of the investment means they are putting their eggs in one basket.
“With DDO, we are in the early stage of using those powers and these powers are going to be tested, we will be looking for opportunities to test them.”
