Money Management 03/08 – It’s time to turn ASIC respect into support
Alan Cameron probably has the most unenviable job in the Australian financial services industry.
As the chairman of the industry regulator, he is continually forced to tread the fine line between consumer advocacy and setting workable parameters for the industry while at the same time keeping his masters in Canberra happy. And he treads this line with great finesse.
At the same time, the Australian Securities and Investment Commission (ASIC) chairman also has one of the pivotal jobs in the industry. Regulations formulated and enforced by ASIC are often the key drivers for developments within the industry.
You only need to look at this year as a microcosm. For fund managers, ASIC has given the green light for fully electronic prospectuses. For financial planners, ASIC is formulating with Treasury the details of the biggest changes ever to hit the industry in the form of the Financial Services Reform Bill (formerly known as CLERP 6).
These two developments are just a snapshot of some of the activities covered by ASIC. There are plenty more activities that go unrecognised by the industry and, it seems, by its masters in Canberra.
At the very time the regulator is struggling with a major shake-up of the industry, the government is trimming the ASIC budget in an effort to boost its own budget bottom line. And the regulator is still in the midst of the chaos set off by the passing of the Managed Investments Act two years ago. When Cameron obliquely alluded to the budget cash squeeze at the recent IFSA conference, he was greeted with applause from the industry heavyweights in attendance.
While the industry does not agree with ASIC all the time, there is clearly a great deal of respect for the regulator. It is now probably time to turn that respect into support for its efforts to secure more funding from the government.
For one, ASIC is about to embark on a major consumer education campaign.
The campaign will try to stop consumers being ripped off by unscrupulous operators. But a campaign of this nature does not simply help consumers. It is well known that education is a necessary precursor to purchasing. Managed funds and life insurance products are still not well understood by consumers and an education process may go some way to changing this.
Any education dollars spent by ASIC will immediately benefit the growth of the financial services industry. Our role as an industry should be to support initiatives such as this and lobby the government to reinstate at least some of the money lost to the government coffers.
Without a vigilant regulator, we would not be where we are today.
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