Government response to Senate Inquiry into ASIC

The Government has released its response to the 61 recommendations made by the Senate Economics Committee inquiry into the performance of the Australian Securities and Investments Commission.

ASIC has already implemented or is working to implement many of the recommendations: ASIC’s Strategic Outlook for 2014–15.

ASIC will establish an Office of the Whistleblower within ASIC to improve the way it deals with whistleblowers.

ASIC has also increased its monitoring of enforceable undertakings, including the reporting of the outcomes.

The Report’s recommendations relating to the regulatory framework, including the role, objectives and funding of ASIC will be considered as part of the Government’s broader response to the Financial System Inquiry.

In relation to the sustainable resourcing of ASIC into the future, the Government is also considering a proposal put forward by ASIC to introduce a cost recovery model in line with arrangements in place in other relevant jurisdictions around the world.

ASIC’s Strategic Outlook for 2014–15 specifically identifies conduct issues as an area of risk and observes that:

  • Weak compliance systems, poor cultures, unsustainable business models and conflicted distribution may result in poor advice, mis-selling and investor loss, especially in managed investments
  • Poor retail product design and disclosure and misleading marketing may disadvantage consumers, particularly at retirement
  • Innovation and complexity in product distribution and financial markets through new technology can deliver mixed outcomes for retail investors,
    financial consumers and issuers
  • Different expectations and uncertainty about outcomes in the regulatory settings can undermine confidence and behaviour
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