The Australian Securities and Investments Commission (ASIC) is facing pressure to report on its use of an extensive set of data collected from the financial services industry under coercive powers.
The issue was raised by Richard Gilbert, chief executive of the Rule of Law Institute of Australia, at the recent Financial Services Council annual conference. Gilbert pointed to the 812-question compulsory survey issued by ASIC to 20-30 of Australia’s largest financial services licensees late last year. The survey was issued under a Notice of Direction, which meant there were significant penalties for those that did not comply.
Gilbert asked Labor MP Bill Shorten and Liberal MP Kelly O’Dwyer how they would ensure “accountability and transparency” in what he described as the “excessive power” handed to the regulator.
Shorten and O’Dwyer respectively expressed the views that such coercive powers should be used “very sparingly” and in “very exceptional circumstances” only. But both maintained a strong regulator was the priority, and as such neither said they would make changes to the regulator’s coercive powers if elected to govern.
“In terms of the principle of coercive powers, I think they need to be used very sparingly — but I’m not going to sit here and say that we’re going to rip them up, because that’s not going to happen,” Shorten said.
O’Dwyer agreed with Shorten’s sentiments.
“You want to use them very sparingly. You want to make sure, though, that you do have a tough cop on the beat. ASIC has got a huge responsibility, a very significant one,” O’Dwyer said.
“We’re dealing with the savings of mums and dads. We’re dealing with their fortunes and their security in retirement. So there needs to be the opportunity for the regulator, if and when it needs to, in very exceptional circumstances, to be able to knock on doors and find the information that is required.”
A different line was delivered by shadow Attorney General George Brandis at a media-sponsored legal debate on the same day. Brandis was quoted as saying a Coalition Government would ask the Australian Law Reform Commission to examine the coercive, information gathering powers used by ASIC, the Australian Taxation Office, the Australian Prudential Regulation Authority and the Australian Competition and Consumer Commission.
Brandis said the powers held by the regulators should be examined carefully, made more consistent, and should rely “less upon unreviewable discretion”.
Gilbert welcomed the Coalition’s announcement.
“These powers should be used sparingly and with very well-honed discrimination, to ensure there is not oppressive regulation and/or an interference with the reasonable running of private sector operations.”
Gilbert said the financial services industry was reluctant to discuss or question the recent industry audit for “fear of regulatory backlash”, but said the industry deserved to be informed about the use of the data.
“This material could be very valuable industry intelligence … it could paint a picture of the industry. If people have gone to the trouble of collecting the data, then why not put it into a composite data set, without attributing it to individuals, so the market can see what’s happening in the industry?”
