The wealth giant has requested clarification of industry jargon and believes a “mechanism” should be established to help the government hold ASIC accountable for its performance.
In its submission to the royal commission’s fifth round, which covered superannuation, AMP said it supports the need for strong and well-resourced regulators with oversight of the financial services sector.
“Additional resourcing may go some way to enable ASIC to act more promptly, but care needs to be taken, given that ASIC is industry funded, to ensure that due process and due accountability is embedded in any new regulatory structures or procedures,” the group said.
However, AMP does not support the establishment of a new regulator for superannuation, believing this may lead to “more uncertainty and confusion”.
The company believes that a number of changes could be considered that would assist the government, the regulators and financial services entities in fulfilling their responsibilities, including “the establishment of a mechanism for the government to hold the regulators accountable for their overall performance”.
The troubled financial services group noted that the Financial System Inquiry proposed the establishment of the Financial Regulator Assessment Board (FRAB) to assess the performance of the regulators against their mandates.
“This reform was not adopted but should now be reconsidered,” AMP’s submission states.
“The FRAB could provide advice to government, based on the FRAB’s assessment of the regulators performance, on how best to nuance or rebalance the regulators’ portfolio responsibilities.”
AMP also argued that there is a need for greater clarity in regulatory guidance and the definition of terms.
“This would assist the industry with more consistent interpretation of the terminology,” it said.
“A good example would be a definition of ‘community expectations’.”
Finally, AMP argues that there is “an inherent conflict of interest” in relation to ASIC receiving the fines directly or indirectly that they impose on the financial services sector.
“Consideration should also be given to the approach adopted by the Financial Conduct Authority (FCA) in the UK towards penalties and fines, which adopts a proportionality approach which ensures that fines reflect the extent of the damage and act as a deterrent,” it said.
AMP’s response to the fifth round of the royal commission comes after the inquiry heard how the group knew it was charging life insurance premiums to dead customers as far back as 2016 yet failed to alert regulators.
The company is also facing a class action led by Quinn Emanuel Urquhart & Sullivan, which argues the company “should have disclosed to the market information about the issues highlighted during AMP’s appearance at the royal commission hearings in April 2018”.
AMP said it will vigorously defend this and all similar proceedings.
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