ASIC has admitted it's overstretched and under-staffed, and that Australia “gets what it pays for” in service.
The comments, from ASIC chairman Greg Medcraft, come after the watchdog announced in a report that its financial advice superveillance team has one staff member for every 115 AFS licensees that are authorised to provide personal advice – and that it relies primarily on “reactive surveillances” to monitor 98.5% of these licensees.
“I think it is important people know we aren’t on every street corner. We would like to be but we’re not,” Medcraft told a parliamentary committee.
“The idea behind this [report] about our resourcing is to say you can have an ASIC at $350m and this is what you get, and you can have one at $250m and it actually shows the committee and the Australian public what you get with what you pay for.”
Last week, an ASIC spokesperson would not confirm if more staff were in the pipeline, telling Wealth Professional sister site Australian Broker Online that its manpower was a matter for the Government.
According to ASIC’s surveillance coverage of regulated populations in 2011–12 report, the regulator has a team of 29 employees who are charged with surveying the 3,343 Australian financial services (AFS) licensees that are authorised to provide personal advice.
It added that 3,293 of these licensees are monitored through “primarily reactive surveillances”. This accounts for 64% of all advisers and 98.5% of all AFS licensees that are authorised to provide personal advice.
ASIC conducts “reactive surveillances” on the 1,316 AFS licensees that are authorised only to provide “general advice”. This segment of the market accounts for 39% of all AFS licensees that are authorised to provide personal advice.
Is ASIC doing enough to weed out the financial advice industry's bad apples? Have your say by commenting below.
Innocent Observer on 18 Sep 2012 12:01 PM
Spot on Merv. As I've always said "if you're going to be a crook, you're going to be a crook". It's as simple as that. ASIC are so bogged down monitoring the overload of compliance we have to deal with that the crooks in most cases get away with it.... and if they do get caught, it seems the worst that happens is they have to give back the money they stole. Reduce red tape, increase penalties and let us all get on with actually serving our clients
Paul F on 20 Sep 2012 10:48 AM
The fundamental truth here is that the regulator has created the problem and now can't afford to provide a solution. The problem is the huge amount of compliance material they have to monitor and an introduced process that is costing the industry a ridiculous amount of money to implement.
They are now trying to push monitoring and supervision onto industry bodies who also have no resources so watch your fees escalate as they take on this burden. No doubt it will become compulsory to be a member of the FPA or AFA hence your industry representatives are not going to be pushing back on it.
Education standards and control of product delivery to market would essentially protect consumers far better than what is obviously a failed model but then ASIC would have to accept responsibility for the product failures that it continues to let into the market.
Properly monitored, disasters such as Westpoint, Lift Capital and Trio Capital, will never get near a retail investor.
Will it happen? Increased supervision at the product level would slow down the ‘latest’ innovative product so our friends at the FSC will lobby against it.
Increased education standards through recognised tertiary institutions will reduce the need for education through industry qualifications and therefore reduce the monopoly held down by the laughable PS146 standards.
Increased education will also mean our friends in the banks can’t turn bank tellers into advisers overnight so they will never support it.
He only thing you do is lobby government and that means the next one as the conflicts in this one means you are wasting your breath.