ASIC's 'sickness' regulatory design

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It is the root cause – not the symptoms – which cause ASIC to sicken, says the Financial Planning Association’s policy head.

In a submission to the Senate Economics Committee inquiry into ASIC’s performance, the FPA recommended the regulatory body adhere to tighter regulations and better cooperate with the financial services industry.  

It is hoped the submission will help ASIC regulate the industry more efficiently, FPA policy and conduct general manager Dante De Gori told Wealth Professional.

He is quick to point out the FPA is providing “constructive feedback” rather than criticising the regulatory body.  

“It’s not about pointing fingers at anyone. Obviously there will be people who are disgruntled with ASIC, who don’t believe ASIC has done its job properly, but that’s also a question of what their own expectation is.”

Problems the industry has had with ASIC stem from unclear guidelines and shoddy regulatory design, says De Gori.

“What really needs to be clarified here is transparency about what the role is and what ASIC is set out to do, and then measure them on that – rather than what you think the regulator should do for you.

“Part of what we’ve asked for is that there should be clear performance goals and key performance indicators for us. We’re actually seeing part of the problem is there should be clear communication between ASIC and the industry about what it is they’re being measured against.”

De Gori compares ASIC to a person going to a doctor to complain of a sore back, when in fact the underlying cause of the soreness is an injured hamstring.

“So it’s about finding what is the true problem – which for ASIC we believe is the regulatory design,” he says.

“The reality is it’s not about throwing more money or resources or putting band aids on the problem, it’s about how do you fix the underlying cause.”

The committee has received more than 100 submissions, says De Gori, and will report to Parliament in March after holding public hearings.  

Key recommendations in the FPA submission include:

  • Improved design and clarity on ASIC’s operations and key responsibilities
  • Defined key performance indicators to more effectively measure performance
  • Greater co-regulation and cooperation between the regulator and professional bodies
  • Development of criteria to define and establish what is an accepted professional body
  • An increased role in regulation of ‘gatekeepers’, including product providers and research houses.

The full submission can be viewed here.

  • Alistair on 8/11/2013 11:06:25 AM

    I do wish folks like Dante would not take a softly, lets be nice approach. This is the regulator we are talking about and if there is one thing that is clear is that they are failing both the industry and the consumer.
    Constantly attacking the FP industry and its planners when the real culprit are the thieves in institutions condoning practices detrimental to the consumer for the sake of sales sales and more sales not to mention those kickbacks and MER's which tend to be in their favor and not a thought for the adviser and even less thought and contempt for the consumer.
    Hey hears an idea. How about when ASIC issues an Enforceable undertaking to say a CBA, AMP or any other institution that it comes with a very massive fine. After all, with $27 Billion dollars in total profits between the big four banks, I would think an appropriate penalty might be say $10 Billion with the EU. Why not, it certainly gets noticed in the US or Europe. Maybe then, the organ grinder managers within these institutions and their minion compliance officers would instead of tolerating systemic problems created by them and imposed on the FP adviser for the sake of selling would find their heads rolling out of the industry.
    ASIC should stop kicking the FP with more red tape, shadow shopping, more compliance nonsense designed to not provide any further enlightenment to the client while drowning the industry and kicking its practitioners for the sake of their own glorification and their existence in a job.
    Many is the instance where the adviser and the consumer are at the receiving end of the stick and so until this regulator has a clear defined role that is positive to the industry and to the consumer, I think it is fair to say that they have been asleep at the wheel for a damn long time.
    Seriously, have we not understood a damn thing since the days of Henry Bocshe and the National Companies and Securities Commission of the 1990's. Then, there was failure and collapse and who got kicked then. The FP industry and the consumer.
    Fast forward to 2013 and again, despite the failures of yet more companies, investment schemes and investors money lost, again the FP industry and the consumer are kicked.
    You cannot keep repeating the same damn mistake with the hope of getting a different result. Wake up ASIC - go after the white collar criminals in this industry. The institutions.
    Much like the illegal drug trade and their drug barons, where locking up the the addict and the dealer will not give the answer. Go after the Organ grinder, the very top and the company as it is them and their corrupt ways that are the issue.
    Ask any person that walked into a bank branch only to be sold garbage in terms of product sales when they have a few quid in a bank deposit. Is this best interest? yeah right ASIC !

  • Matthew Ross on 8/11/2013 12:39:48 PM

    "How about when ASIC issues an Enforceable undertaking to say a CBA, AMP or any other institution that it comes with a very massive fine"...pretty hard to argue against that.

    Great idea. Will take some courage to implement but it is only common sense. Time that we stood up to these companies that think they run the industry.

    Who is our hero?

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