ASIC under fire for ‘failing to meet its obligations’

The Australian Securities and Investments Commission’s (ASIC) capacity and capability to commence proportionate investigation and enforcement action stemming from reports of alleged misconduct will be examined.

The parliamentary joint committee on corporations and financial services has released its agreed terms of reference in relation to the inquiry.

The terms will look into ASIC’s capability ranging from whether or not ASIC is meeting the expectations of the government, community and businesses, the effectiveness of its regulatory tools, and the effectiveness of ASIC’s enforcement measures in protecting vulnerable Australians.

Evidence for ASIC’s failures has been highlighted by the Hayne royal commission into the financial sector.

The inquiry is commencing parallel to Parliament considering new legislations to establish a compensation scheme of last resort. This new scheme has been proposed as a subsidiary of the Australian Financial Complaints Authority (AFCA).

Under this proposed scheme, ASIC would be incentivised to undertake less law enforcement as the regulator would be able to learn about compensation schemes for consumers where law enforcement fails.

According to senator Andrew Bragg, ASIC has failed to apply the laws of the Commonwealth as well as failed to meet its obligations as a regulator.

Senator Bragg said: “To date, the Parliament’s solution has been to pile more and more laws on the statute book. Canberra is addicted to new laws, but law enforcement does not appear to improve.

“The Parliament needs to be accountable for the laws we make and form a stronger view on whether they are actually enforced.”

The senator further stated that it was time to take a “much closer look at ASIC’s law enforcement record and capability”.

“ASIC must get better at its one job of law enforcement, or the integrity of our financial system is at risk,” Senator Bragg said.

In a statement published on 6 October 2022, Senator Bragg stated that ASIC is not “sufficiently focused on law enforcement and prosecution” and suggested that it did not appear that ASIC investigated enough complaints or undertook law enforcement thoroughly.

In addition, the Finance Brokers Association of Australia (FBAA) warned that it would be “keeping a very close eye on” ASIC fee estimates towards 2023 following the release of ASIC’s Recovery Implementation Statement: ASIC industry funding model (2021-22) on 24 October 2022.

[RELATED: ‘Doubled’ ASIC fees ‘cannot happen again: FBAA]

Adrian Suljanovic is a journalist at Broker Daily with more than two years experience reporting on all facets of the third party distribution channel.

Adrian has written for a range of business and finance titles including IFA, Investor Daily and Lawyer’s Weekly before joining the mortgages team in 2022.

He graduated from the University of Wollongong in 2021 gaining a Bachelor of Communication & Media with a major in Digital & Social Media.

E-mail Adrian at: This email address is being protected from spambots. You need JavaScript enabled to view it.