Prudential role for ASIC may be considered by parliamentary inquiry

The parliamentary joint committee on corporations and financial services would consider recommending an extension of the Australian Securities and Investment Commission’s (ASIC's) jurisdiction to include prudential regulation, according to chair Bernie Ripoll.

Responding to a question from a delegate at the Institute of Actuaries of Australia 2009 Biennial Conference in Sydney yesterday, Ripoll said the committee would have "no hesitation in making regulations in this area if we see a need for that to occur".

“While it is not part of our brief, that does not mean that as part of our inquiry the committee members cannot make recommendations in a particular area if a problem or failing exists.”

Earlier, the delegate said there was a need for a prudential regulator in the financial planning products sector and asked whether the committee would consider looking at the “existing boundaries between ASIC and APRA [Australian Prudential Regulation Authority] — which is a prudential regulator — or extending ASIC’s boundaries into prudential regulation”.

Ripoll added that the committee is "having a very close look at ASIC's responsibilities and role and how it can improve the way it operates".

He said the committee is also “interested in the remuneration of advisers and also institutions and how remuneration works across all the stakeholders involved".

“It is very important we can strike a balance between appropriate remuneration for advisers and at the same time see that clients are appropriately advised, taking into account their age and their capacity for risk.”

The committee has to date seen a number of submissions that suggested current professional indemnity insurance for advisers, which is capped at $20 million, is inadequate, he said.