The Investment and Financial Services Association (IFSA) has defended Australia’s financial regulatory regime, saying the regulation has not failed, and that they did not believe the legislative requirements for financial services providers were grossly inadequate.
In a submission to the PJC Inquiry into financial products and services, IFSA said they did not believe the recent collapses in the industry were evidence that the regime had “fundamentally failed”, chief executive Richard Gilbert said.
However, the submission highlighted a number of areas in which the financial service regime could be improved, including recommending that the Australian Securities and Investments Commission consider enhancing its licensing process to ensure that financial services licence holders are sufficiently competent to offer the range of financial services and products for which they are licensed.
A number of collapses may have occurred due to poorly managed conflicts of interest as a result of product providers failing to abide by the obligations of the Corporations Act, according to the submission. Such conflicts of interest were most stark when viewed through the remuneration models that developed, the submission stated.
The submission also stated that margin lending should be included under the same framework as other financial services in the Corporations Act due to the additional investment risk it incurs.
“Our submission has sought to distinguish between critical factors that we believe were causal and other issues which, while important to the operation of a sound and efficient financial services regime, are not considered to have contributed to the collapses that took place,” Gilbert said.
