Expectations gap a risk for ASIC
The Australian Securities and Investments Commission (ASIC) has spruiked its law enforcement record stating that in 2014 it convicted 44 people, recovered $180 million and had 110 people removed from directorships or providing financial services but still struggled with an expectations gap.
The statistics were part of a speech given by ASIC commissioner Greg Tanzer at Macquarie University's Financial Risk Day 2015 in Sydney on Friday in which Tanzer said the corporate regulator had to manage the expectations gap between what it could do and what the public expected it should do.
Tanzer said ASIC had to manage issues related to poor conduct, poor culture, unsustainable business models and conflicted distribution in financial services as well as complex product design and disclosure which may mislead or confuse people.
He said these issues of conduct and Innovation-driven complexity were both strategic risks managed by the regulator alongside an ‘expectations gap' which arose "from the mis-match between the expectations that people have about what ASIC is able to achieve with our resources and powers, and what we actually can achieve",
"ASIC is not resourced to take action in relation to every instance of misconduct that is brought to our attention. We prioritise matters for investigation based on the extent of harm or loss, the benefits of pursing misconduct, and the available evidence. Or, to put it a little crudely, we want to make sure Australians get the biggest bang for their buck," Tanzer said.
He said these issues shaped what ASIC does and as a law enforcement agency 70 per cent of its regulatory resources were devoted to surveillance and enforcement.
Tanzer said this meant ASIC held "gatekeepers to account so that Australians have trust and confidence in in our financial services and markets" and it communicated these actions via media releases and announcements.
He claimed media releases maximised the deterrent effect of ASIC's action and that it would always assert the right to make enforcement outcomes public unless restricted by law and that in doing so it made ASIC's work transparent.
Tanzer stated that people who breached the law typically did so because they thought no one would examine their behaviour but ASIC had a number of tools "to achieve the greatest impact and address the largest areas of risk."
"I also want to make the point that, when it comes to enforcement, ASIC gets results," Tanzer said, stating that in 2014 that ASIC actions resulted in 30 criminals being convicted and 14 jailed, more than $174 million in compensation secured for investors, about $6 million in fines from enforcement matters; 23 Australian financial services licences were cancelled; and 57 people were banned from providing financial services.
AUTHOR
Jason Spits
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