At a forum held in Sydney this morning, David Murray, chair of the Financial System Inquiry (FSI), ASX chief executive Elmer Funke Kupper and a panel of experts from the corporate, consumer, investor and legal sectors debated the question ‘What kind of corporate regulator does Australia need?’.
“This is an important conversation in the wake of questions that were raised about ASIC’s performance, funding and powers by the recent Senate and Financial System inquiries,” said the chief executive of the Governance Institute, Tim Sheehy.
“There are strong community expectations for ASIC to be more effective at cracking down on corporate wrongdoing.”
At the same time, it is generally acknowledged that the regulator’s responsibilities have expanded far beyond its original focus. Yet while ASIC’s responsibilities today extend beyond regulating entities in the financial system to consumer credit and markets surveillance, deep budget cuts over the years have diminished ASIC’s capacity to meet public expectations.
“We are now at a crossroads,” Mr Sheehy said. “While the FSI has recommended changes to funding, have the expanded responsibilities diluted ASIC’s capacity to meet its charter? If the integrity of our markets and financial system relies on a strong and fearless regulator, we as stakeholders have an interest in ensuring that ASIC maintains its credibility as an effective watchdog.”
Mr Sheehy noted that there are many changes ahead for ASIC.
“The registry business is about to be privatised, a three-year funding model is on the agenda, supported by a ‘user-pays’ regime, and the government has just opened a review of its current capabilities,” Mr Sheehy said.
“[The] Governance Institute’s initiative complements these reforms by focusing on what ASIC’s core responsibilities should be in our 21st century economy.
“What should ASIC’s priorities be? How does ASIC best address the expectation gap between its duties and powers and the community’s expectations? And what changes are needed to make ASIC a more proactive regulator? These are issues that are ripe for consideration if ASIC is to fulfil its role in an increasingly complex financial system”, Mr Sheehy concluded.
The Governance Institute of Australia is the only independent professional association whose sole focus is the practice of governance.
It’s interesting that many in the advice sector criticise ASIC and also rejoice at the cuts in funding to it that effectively mean they are safe from its scrutiny. We all know that ASIC can’t afford to watch us and can only react well after a complaint is made – and by then the damage is usually long done and irreparable. I suggest that every financial services business pay a levy of 0.5% to 1% of its turnover (that will include mine! – I hold an AFSL and already pay about 30% or more of my turnover in compliance costs due to the harmful practices of others)to fund ASIC. Taxpayers should not be forced to fund this body; industry should. Let’s do the right thing here rather than merely protect our own (selfish, short-term?) interests.