OPINION: Is ASIC a university or regulator?

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Shifting of responsibility and knee jerk regulations will only result in more bad regulation, says CPA Australia chief executive Alex Malley...

ASIC’s fetish to propose an exam every time a problem is identified is disturbing.

Forcing investors to sit exams is not the means by which to educate investors about often high risk and complex investment products, nor to weed out unscrupulous financial products, and this proposal smacks of a shifting of responsibility.

Knee jerk regulation as a response to every problem will only result in more bad regulation. In a nation where the cost of doing business is putting us at a serious competitive disadvantage, this is something we can ill afford.

The reality is that all investments carry inherent risk. Identifying which risks can be mitigated and then acting on this knowledge is a task, and a crucial one at that, for both regulators and policy makers alike.

The proposal by the Chairman of ASIC to compel everyday mum and dad investors to sit exams is a band-aid, not a solution. A series of exams is hardly the ideal preparation by which to enable an investor to come to grips with product disclosure statements.

As we’ve seen all too often over the past few years, even supposed subject matter experts have failed to fully grasp how some of these products really work.

Again this proposal represents a further abrogation of responsibility by those who should be making the tough decisions to ensure our markets operate fairly, transparently and serve their purpose as a generator of wealth to benefit the entire nation.  

Forced exams will likely see fewer Australians investing, but it won’t address the issues at the heart of the problem.

Yes, problems sometimes require creative, innovative solutions.  However, as we saw during the GFC, there is good innovation and there is bad innovation.