Delays for ASIC shadow shop

The Australian Securities and Investments Commission (ASIC) is highly unlikely to complete its promised return to shadow shopping in the financial planning industry in the current financial year.

There are now clear signs that, despite last year’s statements to a Parliamentary Committee by the chairman of ASIC, Tony D’Aloisio, the regulator has run out of time and resources to complete the exercise inside the 2009-10 financial year timeframe originally discussed.

The regulator has not completed a shadow shopping exercise in the financial services industry since 2006, and the probability that there is unlikely to be another exercise completed before the middle of 2010-11 has been welcomed by financial planning industry spokespeople.

The chief executive of the Association of Financial Advisers, Richard Klipin, said given the amount of work already confronting his members — including the more than 800-question audit document sent by ASIC to major dealer groups — few people would be sorry to hear the shadow shopping exercise had been delayed.

It is understood the shadow shopping exercise has been pushed down the ASIC priority list on the basis of the heavier workloads generated by ongoing government inquiries and the recommendations generated by the Parliamentary Joint Committee on Corporations and Financial Services (the Ripoll inquiry).

ASIC representatives made no mention of shadow shopping when appearing before Senate committees in early February.

When the ASIC chairman last year flagged to the Parliamentary Committee that the regulator would be pursuing a shadow shopping exercise in 2009-10, his comments were interpreted as reflecting statements in favour of such exercises by members of the Government, including those on the committee.

A committee report noted at the time that ASIC had not adequately explained “why it has taken so long to establish plans for another shadow shopping exercise”.

However, reflecting D’Aloisio’s comments, it said it was “encouraged that the decision has been made to conduct another one, even if it is later than desirable”.

In explaining ASIC’s approach to the committee last year, the chairman made clear that shadow shopping represented an expensive and time-consuming business for the regulator.