ASIC must act without ‘fear or favour’: Former chair

Appearing as a witness to the Senate economics references committee’s inquiry into ASIC’s investigation and enforcement, Tony D’Aloisio, who served as chair of ASIC from 2007 to 2011, stressed the importance of the corporate regulator remaining completely independent.

“In my time as chair, I worked with the industry associations, in the sense that I would outline what ASIC was doing and they would outline what they were doing. But I’d be concerned about a connection between a professional association and the chairman or the commissioners of ASIC in any formal sense,” Mr D’Aloisio said.

“The key with ASIC is it has to be fully and totally independent. It should have the discretion to consult with whomever it might want, either in consultation or by order, to require information.”

He added that he doesn’t see a role for “professional bodies to have any greater right than any other individual has to raise issues with ASIC and for ASIC to investigate”.

“In my time, I would not have pursued that level of connection between a professional association or industry group and ASIC. I would remain always at arm’s length,” Mr D’Aloisio said.

Senator Jess Walsh, the deputy chair of the economic references committee, referenced comments from Financial Advice Association Australia (FAAA) chief executive Sarah Abood at a previous hearing in August, in which Ms Abood called for greater cooperation between the regulator and advice associations.

Responding to a suggestion from committee chair Senator Andrew Bragg that he “would have thought you had more standing than a member of the public, with ASIC at least, and they would respond to you and give you some feedback on what you’re sending them”, Ms Abood said the FAAA believes it could “help ASIC more with that standing”.

“We’ve made a few specific suggestions. One is that a priority reporting line be available to members of the profession and professional bodies that will generally have triaged the matters,” Ms Abood said in August.

“The other is that we have an information-sharing mechanism in place whereby we can work better together to improve the standing of the sector. We have a memorandum of understanding with the Tax Practitioners Board, so it’s not without precedent. We think that something along those lines could work well.”

Mr D’Aloisio rejected this sentiment, saying that the “roles need to be quite separate”.

“It’s totally open for anyone to provide any information to ASIC either confidentially or however, and ASIC then assesses that and acts on it. There’s no issue there,” he told the committee.

“As to a formal relationship between an industry body and ASIC – going back to my time; it’s a matter for the current chairman – I wouldn’t readily go with that myself.

“For me, independence is the absolutely critical point. No fear or favour, and the chairman represents that as chair of that body.”

Asked whether there should be a mechanism in place to provide updates on the progress of complaints or referrals made by the public or professional bodies, Mr D’Aloisio said ASIC needs to be “really careful”.

“As chair, I totally would want people to come forward and give information, and I would look at it. That would be as far as I would go,” he said.

“Certainly, there’s information that would be given to you confidentially. There’s information that’s given to you openly. There’s information that’s given to you that could actually lead to self-incrimination. There are a lot of ways a body gets information.

“It has to be really careful on how it assesses that. It has to act without fear or favour and it has to be independent. If it meets those tests, I’d be happy to look at it; otherwise I’m not sure that I’d elevate any particular body in any particular way.”