ASIC under Fire in Senate Economics Reference Committee

The Australian Securities and Investment Commission (ASIC) is under fire from the Senate Economics Reference Committee on "The performance of the Australian Securities and Investments Commission". On 20 June 2013, the Senate referred issues with ASIC's performance to the committee with submissions to be received by 21 October 2013.

The terms of reference of the Committee are the performance of the Australian Securities and Investments Commission (ASIC), with particular reference to:

• ASIC's enabling legislation, and whether there are any barriers preventing ASIC from fulfilling its legislative responsibilities and obligations;

• the accountability framework to which ASIC is subject, and whether this needs to be strengthened;

• the workings of ASIC's collaboration, and working relationships, with other regulators and law enforcement bodies;

• ASIC's complaints management policies and practices;

• the protections afforded by ASIC to corporate and private whistleblowers; and

• any related matters.

The Senate voted unanimously to hold an inquiry into the corporate watchdog following revelations in Fairfax Media that the regulator took 16 months to act on information from whistleblowers about serious misconduct inside the Commonwealth Bank's financial planning unit.

Senator Cameron of the ALP said the inquiry into the Australian Securities and Investments Commission will be wide ranging, and given the scale of the problem, it is ''appropriate for the Senate to investigate a range of issues including financial planners, the Commonwealth Bank and ASIC''.

ASIC completes toward 200 investigations a year and claims a 90% rate of success in litigated matters. However its losses on some high-profile cases have attracted more media attention than its gains. For instance, it was found to have misjudged the seriousness of Steve Vizard’s conduct by being prepared to accept a settlement considered too lenient by the Federal Court.

The two main issues to arise from the CFP matter are the delay between ASIC’s initial knowledge of the circumstances and the commencement of action; and whether enforceable undertakings issued by ASIC were considered appropriate punishments for certain of the advisers.

An ASIC spokesman said: ''ASIC welcomes any inquiry that might unfold and looks forward to the opportunity of providing the inquiry with information on what we do and what we seek to achieve.''

Our Corporations Point-in-Time Service is current and pro-active, providing users with a one stop shop for Corporations legislation.  Contact us for a free trial.