Did ASIC lack intelligence and skills?
The Australian Securities and Investments Commission (ASIC) lacked the regulatory intelligence and forensic skills to appropriately deal with many of the enforcement issues it has faced, according to one of the most senior Senators sitting on the Parliamentary Committee reviewing the regulator's activities.
Tasmanian Liberal Senator and deputy Government whip, Senator David Bushby used an address to a Money Management/Super Review breakfast to give a glimpse of the likely findings of the committee — and made it clear that a lack of expertise within ASIC was an issue.
He said previous failures of ASIC, in fact, pointed to some of the areas which were likely to be considered by the Senate Committee as it worked towards developing its findings.
Bushby said the issues he believed would form at least a part of the basis for the committee's report included:
* Product complexity made it difficult for consumers to make rational and informed decisions;
* Financial advisers were engaged in promoting products not appropriate to client needs; and
* Regulatory intelligence, forensic skill and enforcement were apparently lacking — as the regulation activity occurred well after the event.
On the final point, Bushby appeared to be reflecting ongoing criticism of ASIC's previous approach encapsulated in comments by a former chairman, Tony D'Aloisio, that the regulator could be likened to a policeman who cleaned up after an accident had occurred.
The Parliamentary Joint Committee which followed the collapse of Storm Financial and the parliamentary inquiry which dealt with the collapse of Trio/Astarra both received submissions expressing concern that the financial services regulators had not been proactive in identifying and then dealing with problems.
The committee report dealing with Trio/Astarra noted that the problems had only ultimately been dealt with as a result of the activities of an industry whistleblower.
Bushby acknowledged that the current Senate inquiry had been broad-ranging but that, ultimately, the committee would need to "make a detailed report regarding ASIC's enforcement of the law relating to financial products and advice".
He said he anticipated the committee would deliver its final report by the scheduled reporting date of the end of May.
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