Retail investors unimpressed by ASIC

A survey commissioned by the Australian Securities and Investments Commission (ASIC) has given it a pass mark on its handling on the global financial crisis (GFC), but a less glowing assessment for its protection of retail investors.

The survey, the results of which have been released today, said that many responses suggested that stakeholders did not view the regulator as having done as well in protecting retail investors over the last two years as it did in managing the GFC.

It said that survey respondents had provided “sub-neutral” scores in regard to ASIC assisting retail investors and consumers and in protecting retail investors and consumers.

The survey analysis noted that post-survey interviews had resulted in some consumer bodies suggesting that retail investors were more likely to have become pessimistic about ASIC’s performance over the past two years because they do not fully understand the risks associated with the products in which they invested.

The analysis also suggested that another factor had been an increase in high-profile cases that had resulted in high-profile failures “with ASIC being unable to successfully prosecute”.

The analysis surrounding follow-up interviews suggested that one of the problems for ASIC in dealing with retail investor perceptions was that enforcement action with respect to companies such as Westpoint and Opes Prime took so long.

“It was noted that this is not entirely ASIC’s fault, but processes to reach a finding in Australia seemed to be much longer than in other comparable jurisdictions and delays reduced the effectiveness of enforcement, particularly as a deterrent,” the analysis said.