Financial services reform: If it ain't broke
Financial planners who are close watchers of the Parliamentary Joint Committee on Corporations and Financial Services would be well served by reading two submissions — that of Treasury and that of the Australian Securities and Investments Commission (ASIC).
Having read those submissions they would then be well served by acquainting themselves with the transcripts of the verbal evidence of Treasury officers and ASIC officials to the hearings of the committee.
What they would obviously discern from that reading is that not only do ASIC and Treasury hold very different views, but that Treasury, in particular, has no desire to see the Government being stampeded into a regulatory frenzy by the global financial crisis or the collapse of firms such as Storm Financial, Opes Prime and Westpoint.
While ASIC’s underlying theme has appeared to be an argument for tougher regulation, Treasury’s underlying theme has been that the system is not fundamentally broken and requires no more than some minor improvement.
The Treasury theme is arguably the most persuasive and realistic in circumstances where the world is currently experiencing one of the most dramatic economic and financial events of the past 60 years. The ASIC line of argument would have a good deal more currency if only the regulator would acknowledge that it has not been blameless.
Giving evidence to the inquiry, a senior Treasury official said while a few stress cracks had appeared in the system, nothing was fundamentally broken and that the Government was actively working via legislation to fix the stress cracks around issues such as margin lending and licensing.
The same official said Treasury believed the existing regime had “given the means to ASIC, the regulator, to implement a system that is appropriate and strikes a balance between the needs of the various stakeholders”.
In other words, Treasury believes the existing legislation imbues ASIC with sufficient powers and that it is a matter for the regulator how it ultimately translates and polices that resulting legislative environment.
Whenever there are market failures or corporate collapses, the first instinct of politicians and many bureaucrats is to seek the making of new laws. However, there is plenty of evidence to suggest that the existing laws would have been sufficient if they had been more effectively policed.
— Mike Taylor
AUTHOR
Mike Taylor
Recommended for you
The emergence of DeepSeek, a Chinese artificial intelligence (AI) start-up that claims to have built an advanced large language model in just two months for under US$6 million, sent shockwaves through the AI world and cratered US tech stocks.
Donald Trump’s presidency has already begun reshaping the corporate and political landscape in the US, with executive orders rolling back diversity, equity, and inclusion (DEI) initiatives and clean energy efforts.
In this episode of Relative Return Unplugged, hosts Maja Garaca Djurdjevic and Keith Ford are joined by AMP chief economist Shane Oliver to take a look at what can be learned from 2024 as attention turns to what markets will do in the new year.
Join us for a special episode of Relative Return Unplugged as hosts Maja Garaca Djurdjevic and Keith Ford are joined by shadow financial services minister Luke Howarth to discuss the Coalition’s goals for financial advice.
