The Australian Securities and Investments Commission (ASIC) did not receive more funding from last Tuesday’s Budget but it can expect to do so in years to come as it takes on more responsibility for delivering and overseeing the implementation of the Government’s Future of Financial Advice (FOFA) changes.
It is axiomatic of Government policy changes that there are always winners and losers, and ASIC can be counted a winner because of the centrality of its role – something which will create the need for more specialist staff and therefore a larger share of the public purse.
Viewed objectively, ASIC has been treated highly fortuitously in the FOFA processes.
Where many Government departments and agencies are treated as simple delivery conduits with respect to policy, ASIC has enjoyed a seat at the table as not only a regulatory delivery conduit but also a ‘stakeholder’.
The net result has been to significantly amplify the regulator’s voice. ASIC has not only been able to have a voice in the policy development which will ultimately be translated into legislation, it will also have a voice in translating that legislation into the regulations it will police.
There will be those who argue that there is no great harm in a Government regulatory agency providing its input and expertise, but this overlooks the reality that such agencies are just as capable of pursuing self-interested agendas as any of the major industry groups.
In circumstances where ASIC’s agenda has, over the years, been very much a reflection of those leading the organisation, financial planners would do well to reflect on the background of the man announced by the Government last week to succeed Tony D’Aloisio as chairman – Greg Medcraft.
Planners would instantly recognise Medcraft as the ASIC Commissioner directing the latest shadow shopping exercise within the financial planning industry but they should also know that he has a strong background in securitisation and structured investments.
Medcraft’s background suggests that while he may have a good understanding of some of the more complex products in the market, he will not necessarily have a good feel for the environment in which independent financial advisers are required to work.
As well, in circumstances where shadow shopping appeared not to be a priority during D’Aloisio’s period as chairman, the industry needs to determine whether Medcraft has any personal ownership of the current shadow shopping exercise.
Where the Government’s approach to FOFA has given ASIC a high level of influence, the views and cultural approach of the man leading the organisation will be vital.
