ASIC: Power without glory?

Mike Taylor writes that the Australian Securities and Investments Commission has received a substantial increase in its powers over the past decade, but there are no guarantees this will translate to greater effectiveness.

Over the past 10 years the Australian Securities and Investments Commission (ASIC) has found itself handed more powers and responsibilities as successive Governments – both Labor and Coalition – have sought to address financial services scandals and mishaps ranging from the collapse of Basis Capital through to the scandals which surrounded Commonwealth Financial Planning.

With those increased powers and responsibilities, ASIC has seen frequent boosts to its allocations from the Federal Budget and, not unconnected with this, now stands to benefit from the industry funding model which it lobbied the Government hard to receive.

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But, as the financial services industry considers the added cost of industry funding for the financial services regulators it might also ask whether, imbued with more powers and more money, ASIC and the Australian Prudential Regulation Authority (APRA) will, in future, be any more capable of identifying and heading off incidents such as Basis Capital, Storm Financial, Opus Prime or the issues which impacted Commonwealth Financial Planning, Macquarie and National Australia Bank (NAB).

Money Management has pointed out in the past that it was not a lack of legislative capability which impeded either ASIC or APRA in dealing with Opus Prime and Storm Financial. Rather, it was a wont of proactivity which it is to be hoped no longer exists in 2017.

But the bottom line is that, irrespective of the improved effectiveness of ASIC, financial planning companies and others are being asked to pay a great deal more for regulation and external dispute resolution (EDR). At the same time, their industry organisations such as the

Financial Planning Association (FPA) and the Association of Financial Advisers (AFA) will find themselves doing the hard yards around enforcing codes of conduct approved by, yes, ASIC.

ASIC last month told the Parliamentary Joint Committee on Corporations and Financial Services that while it would be in the business of approving financial services codes of conduct, it would not be in the business of enforcing them – that, it seems, will be the job of the

FPA, AFA et al. There is no mention of the degree to which the FPA and AFA undertaking such enforcement duties will defray the overall regulatory funding costs. Similarly, while ASIC acknowledges it has substantial power over the conduct of the new Australian Financial

Complaints Authority (AFCA), it would only be in the business of exercising those powers “on an exceptional, last resort basis”.

In short, ASIC has more power than ever before, it is likely to be the beneficiary of a funding model which adds substantially to its discretionary expenditure, its executives may receive higher salaries if the regulator is uncoupled from the Australian Public Service but there appears to be no substantial increase in the regulator’s expected workload. All of which should underscore the FPA’s warning to the Productivity Commission (PC) that the costs and requirements of regulation are becoming overwhelming and its claim that in the near future one piece of personal financial advice will be regulated by seven regulators – ASIC, Tax Practitioners Board (TPB), AUSTRAC, Information Officer (Privacy), APRA, the Australian Taxation Office (ATO), and the new Financial Adviser Standards and Ethics Authority (FASEA) – all administering acts and regulatory requirements using different language and imposing different compliance requirements on financial planners.

It said that in addition, the same piece of advice will have oversight and interpretation by the courts, the new Australian Financial Complaints Authority (AFCA), Australian financial service licensees and professional bodies such as the FPA.

It is to be hoped the Government knows what it has created and the likelihood that while it will push up the cost of advice it will not prevent a repeat of Opus Prime or Storm Financial.


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If you want to know when and how the horse bolted, ask ASIC. If you want a more effective regulator best to ask someone who has some idea about financial advice and the pitfalls and traps therein.

Another top article, Mike. Imagine that you were aware (along with all the financial planners and mortgage brokers) of an issue like this: Would you tell the FPA, ASIC or the government OR perhaps you would look at this article AND then decide that is not the way to treat someone doing the right thing by consumers! You would then decide that there has to be a better way and search overseas to find:,, and What decision would you make, Mike ?

Keep up the good work.



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