ASIC in Need of Urgent Reform - Plans Made by Government
Tuesday 22 April 2014 @ 11.17 a.m. | Trade & Commerce
After global law firm K&L Gates has publicly criticised the regulation of financial services in Australia by the Australian Securities and Investment Commission (ASIC), in particular ASIC Regulatory Guides and Class Orders, the government has also announced a move to privatise the ASIC corporate register to cut costs.
The Financial Systems Inquiry
Previous financial system inquiries, including the Campbell Report in 1981 and Wallis Report in 1997, were the catalysts for major economic reforms in Australia. The Campbell Report led to the floating of the Australian dollar and the deregulation of the financial sector, whilst the Wallis Inquiry led to streamlined financial services regulation, the creation of the Australian Prudential Regulation Authority (APRA), and the current form of ASIC.
The Financial System Inquiry is aimed to establish a direction for the future of Australia's financial system and will lay out a 'blueprint' for the financial system over the next decade, including addressing changes brought about by domestic and international economic and financial crises, a substantial regulatory reform agenda, the growth in superannuation, changes in industry structure, new competitive dynamics, technology, innovation and broader macroeconomic trends.
Initial submissions for the inquiry closed on 31 March 2014 and over 250 submissions were received, with K&L Gates only one whose comments highlighted the inadequacies of the current regulatory system:
"Regulator overlaps, inconsistencies in enforcement and successive regulatory modifications have lead to pervasive uncertainty in the financial services industry...A rationalisation and consolidation of financial services regulation would benefit consumers, industry and the Australian economy at large...The most over-used and misapplied legislative instruments are ASIC Class Orders and ASIC Regulatory Guides. Both have been utilised to create entirely novel regulatory regimes for specific categories of financial products and financial service providers."
Government Initial Response to Submissions
The Government's initial response to the submissions was to consider privatising the ASIC corporate register, providing a much needed cash injection for the Government, as well as simplifying consumer use of the register:
"You end up with a one-stop shop for financial services and even other registry thing you go to. If you want to update, you want to go to one place et cetera… I think the registry is one that probably would be better moved out, aggregated with other registries to provide a one-stop shop for Australians."
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