ASIC should face regular reviews
The Senate Economics References Committee is recommending that the Australian Securities and Investments Commission (ASIC) should be subjected to regular reviews, following its report into the regulator's performance.
The reviews would take place every two years and after any instance of gross malfeasance which is investigated by ASIC with the review to determine how the regulator could have minimised or prevented loss.
The committee also recommended that the Financial Ombudsman Service (FOS) and the Credit Ombudsman Service (COSL) should set key performance indicators (KPIs) in relation to their management of complaints. Further recommendations relating to FOS and COS called for increased maximum awards that were indexed to the consumer price index.
ASIC's call for a user-pays funding model was also supported by the Committee.
Recommendations from the Senate Economics References Committee Report into the Performance of the Australian Securities and Investments Commission
Regular reviews of ASIC
Recommendation 21 - The committee recommends that ASIC put in place a system whereby, after gross malfeasance is exposed, a review of ASIC's performance is undertaken to determine whether or how it could have minimised or prevented investor losses or consumer damage. Spearheaded by a small panel of independent, experienced and highly regarded people (with business/legal/ academic/public sector and/or consumer advocacy backgrounds), together with all ASIC commissioners, this investigation would identify lessons for ASIC to learn and how to incorporate them into ASIC's mode of operation. The committee recommends further that their findings be published including details of any measures ASIC should implement
Recommendation 55 - The committee recommends that at the end of two years, the government undertake a review of the Australian Securities and Investments Commission Act 2001 that would consider ASIC's governance arrangements, including whether ASIC should be governed by a board comprised of executive and non-executive members.
Reviews of External Dispute Review mechanisms
Recommendation 5 - The committee recommends that the Financial Ombudsman Service and the Credit Ombudsman Service set key performance indicators (KPIs) for meeting milestones in their management of a complaint, publish these milestones and KPIs on their website and report their performance against these KPIs in their annual reports.
Recommendation 6 - The committee recommends that ASIC, in consultation with the Financial Ombudsman Service (FOS) and the Credit Ombudsman Service (COSL):
- Consider amending the terms of reference for FOS and COSL so that the caps on the maximum value of a claim that the EDR schemes may consider and the maximum amount that can be awarded are increased and indexed to the consumer price index;
- Examine the processes for reporting to ASIC matters of significance and emerging systemic issues with a view to improving the reporting regime;
- Establish protocols for managing allegations of less serious fraud to ensure that such complaints do not get lost in the system and are recorded properly on ASIC's databases;
- Improve the guidance provided to complainants so they fully understand that FOS and COSL are dispute resolution bodies and that complainants must prepare their own cases; and
- Consider establishing special divisions in FOS and COSL to deal with small business complaints.
Introduction of user-pays levies
Recommendation 50 - The committee recommends that the current arrangements for funding ASIC be replaced by a ‘user-pays' model. Under the new framework, different levies should be imposed on the various regulated populations ASIC oversees, with the size of each levy related to the amount of ASIC's resources allocated to regulating each population. The levies should be reviewed on a periodic basis through a public consultation process.
The government should commence a consultation process on the design of the new funding model as soon as possible.
Money Management’s coverage of the Senate Committee report into the performance of ASIC:
Senate Committee recommends royal commission
Bushby issues dissenting report
CBA refutes senator's deflection claims
Senate report calls for adviser banning powers and increased penalties
Report calls for higher education standards and enshrinement
Expect ASIC to be more rigorous
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