ASFA argues for primacy of ASIC

The Australian Securities and Investments Commission should be retained as the primary consumer protection regulator for financial services, according to the Association of Superannuation Funds of Australia (ASFA).

ASFA has used a submission to the Productivity Commission’s Review of Australia’s Consumer Policy Framework to argue that financial services require a regulator that has the depth of specialist knowledge necessary to understand complex and highly technical issues.

As well, it said that that financial services regulation was increasingly global and behaviour-driven rather than rule-drive.

The ASFA submission said that, importantly, the impact on consumers could be significant when things went wrong.

It said, however, that ASFA agreed that ASIC might need to work more closely with the Australian Competition and Consumer Commission to minimise the risk of both duplicated enforcement effort and inadvertent failure to fully regulate some financial activities.

The submission said that the extension of a generic consumer law to financial services would need some modifications and cited as an example the likelihood that the extension of strict liability to misleading and deceptive conduct having the potential to lead to risk-averse behaviour including longer and more complicated disclosure documents.

It said this was likely to decrease, rather than increase, the ability of consumers to understand disclosure documents.