Do ASIC regulatory requirements exceed law?

The Australian Securities and Investments Commission (ASIC) has been accused of exceeding the requirements of the law via the imposition of regulatory expectations, including with respect to ongoing fee arrangements.

The Stockbrokers and Investment Advisers Association (SIAA) has repeated its messaging to ASIC about imposing “expectations of compliance with the law that exceeds what the law requires”.

“…we consider that in certain cases ASIC has not struck the right balance between providing sufficient clarity to support compliance and allowing flexibility for entities to apply the law in a way that is proportionate to their business model and circumstances,” the SIAA said.

“ASIC should not be using regulatory guidance to make law and impose more onerous obligations on its regulated population than those legislated by Parliament. ASIC Information Sheet 283 Supervising your representative’s business communications is an example of this,” it said.

The SIAA response to ASIC argues that “the primary law is the best place for general principles while detail and prescription is best placed in legislative instruments, adding that “a recent example of regulatory complexity resulting from detailed and prescriptive requirements being included in primary legislation is the Ongoing Fee Arrangement provisions”.

Elsewhere in its response, the SIAA said a key reason stakeholders prefer prescriptive guidance from ASIC is the complexity of the underlying law that the guidance is seeking to explain as well as the severe penalties for non-compliance.

“Without reform of the underlying law, we do not consider that there will be appetite amongst ASIC’s regulated population for less specificity in its guidance,” it said.

As well, the SIAA said that while it welcomes ASIC’s work in simplifying regulation and attempts to ease the regulatory burden, reduction of regulatory complexity will not be achieved without implementing the recommendations of the Australian Law Reform Commission (ALRC).

It said that without legislative reform it will be challenging for ASIC to make potential improvements proposed in the Report that will result in the content of its Regulatory Guides being any simpler or more practical.