ASIC is a monster and successive Treasurers played Frankenstein
ANALYSIS
Despite the semi-bipartisan nature of the harshly critical Senate Economics References Committee report into the Australian Securities and Investments Commission (ASIC) nothing substantive will happen in the life of the current Parliament.
But what should worry the chair of ASIC, Joe Longo is the semi-bipartisan nature of the report. Government senators did not sufficiently disagree with the underlying findings delivered by Committee report to deliver a full dissenting report they simply added their own views.
Longo, of course, knew what was coming and ASIC had sought to forestall the adverse findings by going to the extraordinary length of lodging an 11th hour supplementary submission defending its position and denying that it had “obfuscated” or “undermined” the inquiry.
But much as financial advisers may enjoy an element of schadenfreude as they read the report delivered by committee chair, NSW Liberal Senator, Andrew Bragg, they would well understand that if ASIC has become a regulatory monstrosity then politicians on both sides of the `divide have been the architects of that monstrosity.
Indeed, the building of the monster was easy to witness as Governments tacked on elements such as oversight responsibility for the Australian Financial Complaints Authority (AFCA), the now-defunct Financial Adviser Standards and Ethics Authority (FASEA) and allowed scope for ASIC to fund consumer groups via consultative arrangements.
All of this was happening as ASIC became responsible for licensing, the Financial Adviser Register, took on oversight of superannuation funds and continued its myriad other tasks not least those around the Australian Securities Exchange.
While ASIC chairs may have complained the regulator was being stretched, they nonetheless embraced being handed additional powers.
Successive Treasurers have been party to the appointment of ASIC chairs and commissioners who arguably reflected political patronage, and the Industry Funding Model which has become the bane of financial advisers was championed by former chair, Greg Medcraft, who was an appointee of former Labor Treasurer and now super fund chair, Wayne Swann.
Worth mentioning, too, is the fact that having gained a taste for industry funding, neither side of politics is showing any inclination to scrapping it. No, the best they can signal is a tweak.
So, the report of the Senate Economics References Committee should be welcomed because it has acknowledged the litany of problems faced by people dealing with ASIC but, at the same time, it must be recognised that beyond recommending splitting ASIC’s functions, it has not come up with any substantive answers.
Under the report’s recommendations, Australia’s so-called ‘twin peaks’ financial services regulatory model would simply move to a ‘triple peaks’ model.
However, there is merit in Senator Bragg’s suggestion that the Government scrap the commission model for the regulator and move to the statutory appointment of chief executives who can be better held to account by the Parliament and stakeholders.
Just don’t hold your breath waiting for any substantive change to occur.
AHoles
S##theads
Imbeciles
Corrupt
Sounds like typical Canberra over the last 20 years.
Not only to Advisers.
How does a country abundant in land, energy and building resources have the most unaffordable housing as a nation in the whole world.
Canberra have failed for decades
The one saving grace in all this mess is that our corrupt system of political donations is nowhere near as bad as that in the USA – YET!
Even the casual observer of the material distributed by the AEC quickly realises that the big banks would donating around $1 million each to the Coalition in power. That doesn’t include the money that went indirectly to the collection from all those nice little Liberal party clubs. The result, the banks got bank for buck, all designed to reduce the numbers of self employed advisor competition – Us.
The banks have always been smart political operators. Students of history might remember the 1949 election where the banks campaigned hard against Labor’s proposed bank nationalisation. The banks developed LIF to help sell their tired old life insurance companies and tied it in nicely with our friends at ASIC, who have hated commissions from the time they were born. ASIC had just engineered Report 413 by looking at only one dealership – Guardian. A marriage of ideological and practical convenience-banks and ASIC.
This industry is still suffering from LIF and will continue to do so until the CEOs of our remaining life insurers come to realise that it’s not a good idea. But they won’t do it while they can keep the share value up by gouging out existing policyholders.
With two former bank employees in key ministerial spots in the Coalition, 3 banks trumped up $11.5 million to introduce FASEA for three years. Why? Easy, the banks knew that the smaller AFSLs would have to be asked to stump up a lot of money to train advisers to pass a level III university exam. Predictably a whole stack of advisers walked. Mission accomplished, but things overtook the banks, because by the time the effects of the FASEA exam had become obvious, the banks had decided to get out of advice, with reparations over $25m
Enter Labor. While the banks give relatively small amounts to Labor political funding, the industry super funds, directly and indirectly, are the most significant contributor to Labor Party funding as we speak. They too want bang for buck. Everything Mr Jones has done is in the short-term or long-term interests of the industry superfunds, and their bank-like desire to eliminate self-employed independent advisers who might just occasionally recommend that industry super funds may not be the answer for everyone.
When you add ASIC to that smelly pot , it is like watching the witches campfire at the start of Macbeth
Will Burnham Wood ever come to Dunsinane?