ASIC avoids backing design of CSLR
At the same time as the Senate is being asked to pass the Compensation Scheme of Last Resort (CSLR) legislation, the Australian Securities and Investments Commission (ASIC) believes it will incentivise those paying for the scheme to dob in misconduct.
ASIC has formally declared itself a supporter of the CSLR but has steered clear of backing the design of the legislation stating that is a matter for the Government.
The regulator’s avoidance of endorsing the design of CSLR comes as financial advice licensees strongly condemn the fact that product manufacturers, particularly Managed Investments Schemes (MIS) will not be levied to pay for the scheme.
In a submission to the Senate Economics Committee inquiry into ASIC’s regulatory and enforcement, the regulator said it had “long supported the introduction scheme of a compensation scheme of last resort that responds to unpaid external dispute resolution (EDR) determinations”.
“Unpaid EDR determinations represent a gap in the framework that compromises consumer trust and confidence in the financial system and the effectiveness of AFCA in providing access to justice and redress to consumers and small businesses,” it said.
The ASIC submission pointed out the legislation to establish the CSLR had been introduced by successive governments in 2021 and 2022 and stated “the design of the CSLR remains a matter for Government.
“The legislation as introduced to Parliament in both 2021 and 2022 envisages a similar oversight role for ASIC in relation to the CSLR to our current oversight role of AFCA [Australian Financial Complaints Authority],” it said.
“Beyond the public benefit in ensuring that consumers affected by financial firm misconduct receive the compensation they have been awarded following the IDR and AFCA processes, a CSLR has no bearing on ASIC’s risk-based regulatory or enforcement approach.”
“The existence of a CSLR will provide strong incentives for industry participants to inform ASIC about misconduct that they see in the market.”
Elsewhere in its submission, ASIC confirmed the close nature of its relationship with AFCA stating that staff of the two organisations meet on a monthly basis “typically to focus on emerging issues or trends identified by AFCA in its complaints handling work that are relevant to the legislation ASIC administers, or that relate to the conduct of a specific licensee that may be the subject of ASIC regulatory interest”.
It said that senior ASIC and AFCA staff also met on a quarterly basis to “discuss reports about financial firm members and any regulatory enforcement action that is of mutual interest”.
“The existence of a CSLR will provide strong incentives for industry participants to inform ASIC about misconduct that they see in the market.”
Yeh and so what ASIC ?
ASIC will still do NOTHING 99% of the time and if ASIC do actually do something it will be 5 plus years too late.
How many years and misconduct & many informants did ASIC get for Dodgy Dixon’s ? Yep 5 years too late to do anything ASIC.
The only thing ASIC did was advertise for Dixon’s clients to sign up to AFCA so good Advisers get forced to bail out Dodgy Dixon’s fraudulent MIS’s via CSLR.
FFS it’s a disgusting mess.
So essentially ASIC is saying we’re going to charge you to do OUR job
It won’t make any difference whether we do their job for them or not…. either way, costs are still going to increase!!!