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.