ASIC accused of over-reach on IDR name and shame

The Australian Securities and Investments Commission (ASIC) does not have the legislative authority to name and shame financial services licensees as part of a new approach to handling internal dispute resolution (IDR) and reportable situations data, according to the Stockbrokers and Investment Advisers Association (SIAA).

In a blunt response to ASIC’s consultation canvassing publishing the IDR and RS data including naming licensees, the SIAA said it fundamentally opposes the approach.

“SIAA fundamentally opposes ASIC’s approach to the publication of firm level IDR and reportable situations data that includes firms’ names and licence numbers,” it said. “SIAA does not consider that ASIC has the legislative authority to publicly name and shame licensees in this way as regards their reportable situations data.”

It said ASIC “must reconsider its approach to publication of reportable situation and IDR data”.

“Using licensees’ data to publicly name and shame them is a completely inappropriate use of data that licensees are required by law to report to ASIC. SIAA does not consider that ASIC has the legislative authority to publicly name and shame licensees in this way as regards their reportable situations data,” the SIAA said.

“ASIC is not required by the Corporations Act to publicly name and shame licensees in this way as regards their IDR data. Any additional transparency that may be achieved by these measures is not worth the additional burden that will be imposed on licensees,” the SIAA said.

“It does not appear from the Consultation Paper that ASIC has considered the full impact of these proposals.”

The SIAA said that reporting at licensee level is not consistent with the purpose of the breach reporting regime and that its “primary concern is that the threshold question of the intended objective of this initiative has not been satisfactorily justified”.

“The reportable situations regime is intended to facilitate ASIC’s supervisory and enforcement role — not publicly name and shame licensees. We strongly oppose ASIC publicly naming and shaming licensees,” it said.

“We agree with the Consultation Paper that reports about reportable situations are a critical source of regulatory intelligence for ASIC that may enable it to detect significant non-compliance behaviours early and take regulatory action where appropriate. “

“However, publishing breach reporting data on a name and shame basis does not further any of these regulatory aims.”

“Supervising licensees is not a role for consumers. It is ASIC’s responsibility. A consumer who reads the reportable situations data of a licensee does not have any of ASIC’s investigative, supervisory or enforcement powers. ASIC is meant to undertake the analysis of the data. We therefore struggle to understand how publicly naming and shaming licensees helps consumers when it is ASIC that has the responsibility to analyse the data provided, supervise licensees and enforce the law,” the SIAA said.

“We consider that this naming and shaming approach is akin to ASIC handballing its responsibilities to the court of public opinion and abrogating its responsibilities for supervision and enforcement.”