It is remarkable how many people were surprised by the comments provided to a Parliamentary committee by senior executives of the Australian Securities and Investments Commission (ASIC) on the underlying workings of Australian Financial Services Licences (AFSLs).
In short, the regulator made clear that an AFSL was much like a motorist’s licence — it is merely proof that the holder has met the requirements relating to driving, not that they are a good driver and an appropriate road user.
This, of course, begs the question of whether the granting of an AFSL should be a more onerous process and whether, having gained a licence, the holder of an AFSL should be more closely scrutinised by the regulator.
Perhaps as the Federal Government moves further down the track of reviewing the workings of the financial services industry it should examine the existing licensing regime and the manner in which it is perceived by the public.
However, on the available evidence, not even a more rigorous licensing regime would have served to avert collapses such as Storm and Westpoint. In both cases, culture rather than compliance was the issue.
— Mike Taylor
