The Financial Regulator Assessment Authority (FRAA) on Thursday delivered the findings of its inaugural review of ASIC and made four recommendations, which are expected to improve the effectiveness and capability of the corporate regulator.
The watchdog’s first review was a targeted assessment of ASIC’s effectiveness and capability in strategic prioritisation, planning and decision making, ASIC’s surveillance function, and ASIC’s licensing function. It also examined the regulator’s use of data and technology in each of these areas of focus.
The report, titled Effectiveness and Capability Review of the Australian Securities and Investments Commission (ASIC), acknowledged that while ASIC is “generally effective and capable in the areas reviewed”, “there are important opportunities to enhance its performance”.
The four recommendations made include:
- ASIC requires a substantial uplift in its data and technology capability, which will involve cultural change.
- ASIC should have a stronger focus across the organisation on enhancing the quality of its engagement with stakeholders.
- ASIC should enhance its ability to measure its own effectiveness and capability, and communicate the outcomes of such assessment transparently, both internally and externally.
- ASIC should continue to broaden its mix of skill sets to ensure it can meet the current and future needs of the organisation.
“The FRAA expects that the implementation of these recommendations will require a cultural shift in the way that ASIC approaches its work and engages with its regulated population and broader stakeholders,” the report said.
“Such a cultural shift should increase the confidence of government, and indeed all stakeholders, in ASIC’s effectiveness and capability”.
ASIC welcomes report
In welcoming the report, ASIC chair Joe Longo said: “We need to keep pace in an environment of accelerated change in order to be a confident and ambitious regulator”.
“I welcome the FRAA’s recommendations which align closely with my priorities for ASIC.”
The corporate regulator identified several key initiatives currently underway that align with the FRAA’s recommendations, highlighting its “multi-year data and digital strategies” that focus on uplifting its technology systems, including its licencing system.
The corporate regulator also flagged its “people strategy”, which includes building “a future-fit workforce that is equipped with a broad skill set”.
Also underway are “regulatory efficiency initiatives” that are expected to make changes to the way ASIC administers the law.
“We will continue to implement the FRAA’s findings in our future work,” the chair said.
“We will always be committed to ongoing improvement of our effectiveness and capability to become an even stronger regulator, trusted by the community and always looking ahead,” he added.
The FRAA was established in response to recommendations 6.13 and 6.14 of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, and is tasked with reviewing and reporting on the effectiveness and capability of ASIC and APRA.
The then treasurer Josh Frydenberg announced the creation of the FRAA in April last year.
“In establishing the FRAA, the Morrison government is ensuring that Australia’s financial regulators will continue to be strong and effective, maintaining the community’s trust and confidence in the financial system,” Mr Frydenberg said at the time.
It was earlier confirmed that the FRAA would not have the power to make a comment on individual enforcement actions taken by the regulators “so that operational independence is not unreasonably impacted”, nor will it be able to direct regulators to implement any of the recommendations made.
I had a client who later became an ASIC lawyer. Soon thereafter, the client demanded a refund of their insurance premiums, as the insurance company she was with had been pinged for telesales. I reminded the client of the 10 hours we had spent together identifiying their needs, presenting an SoA, and completing insurance applications, and how none of it was over the phone.
They subsequently wanted to cancel their insurance, and after the usual disclaimers etc, we sent the forms to the client, password protected. We didn’t get a reply for some time. Eventually we receive a premium failure notice, as the client had also changed their super funds. I contacted them, and asked if they wanted to retain their cover or not (there were premiums coming out of cashflow that the client could not have failed to notice, but their mother in law was dying of cancer, so presumably there had been a change of heart).
The client denied ever receiving the cancellation notices, and asked for them to be sent again. We checked the next day, and they claimed to have not received them. We asked the client to check their junk folder, and behold! they found both the original and latter cancellation notices.
Now for the punchline.
The client had the temerity to tell me that they would backdate the forms, and the insurer “would have to refund me the premiums”.
Such is the calibre and ethics of the people employed by ASIC.
To their “credit”, we received the signed forms back shortly thereafter, signed and dated correctly.
The 191 Failed and Frozen Financial Products from January 2006 to August 2022 cost Australian mums and dads 43,731.42 (Value ($m) rounded to nearest million), Thats 43 Billion Australian dollars, seven hundred and thirty one million, four hundred and twenty thousand. ASIC earned revenue while Australians got ripped off.
“…ASIC should have a stronger focus across the organisation on enhancing the quality of its engagement with stakeholders…” – engagements like when they ban Advisers for having a different opinion (ie one that’s based on experience) to their staff many of whom have 2-5 years at most of practical industry experience if any, as to how best to calculate insurance needs; or whether a product provider’s “Balanced” fund is actually a “Balanced” asset allocation and therefore appropriate to their risk profile? Or engagements similar to those when they ignore evidence when making decisions that affect livelihoods of clients and advisers alike? Perhaps they mean engagements of the type where clients are handed box loads of paperwork that they don’t want, don’t benefit from, don’t want to pay for, and complain about receiving – all in the name of protecting the consumers and providing transparency?
ASIC should learn what a fact is before releasing a fact sheet.
It’s too late to fix the toxic culture at ASIC that has been fostered by it’s leaders and is now entrenched. ASIC only answers to themselves, is untouchable and has no accountability when they simply send a bill to advisers to fund their ever expanding expenditure. They hate advisers with a passion and due to this refuse to take any feedback from the real stakeholders, as proven in this review. Nothing will change despite the quotes from Mr Longo, which I am sure were delivered through gritted teeth.
Wow… a review of the reviewer…. How much red tape can one country have? LOL!!!!! Imagine the progress this country and in-deed the world might enjoy if we could actually rapidly refine, adapt, progress, repeat – without the chains of bureaucracy slowing things down to one tenth of the possible pace of progression.
Only 15 years too late!!! Great work guys