More calls to limit ASIC’s discretionary powers
The Australian Securities and Investments Commission (ASIC) has a record of exceeding its delegated powers and should not be given scope to do so in future.
That is one of the clear bottom line of messaging to Australian Law Reform Commission (ALRC) from the major financial planning and accounting groups which have cited past examples of where the regulator has over-stepped the mark.
Just days out from the final recommendations of the Quality of Advice Review (QAR) being presented to the Government, the latest Joint Associations submission to the ALRC has made clear that accountants and financial advisers are more comfortable with ASIC having only very limited powers.
It states this is because ASIC is already responsible for having developed the tick-a-box compliance culture that exists today.
“ASIC’s regulatory guidance is not legally binding. However, the industry believes it is used by ASIC and AFCA [Australian Financial Complaints Authority] as the measure of compliance for enforcement and dispute purposes. Therefore, it is used by industry as the legal requirements that must be met,” the Joint Associations submission said.
“This is because ASIC often over-reaches with regulatory guidance by including additional requirements that are not in the primary legislation or the regulations, even in circumstances where delegated legislative powers have not been given,” it said.
The submission then cited the example of ASIC exceeding requirements laid out under the Corporations Act with respect to compensation arrangements for retail clients with Regulatory Guide 125 setting a minimum amount of professional indemnity insurance cover of at least $2 million for any one claim.
“Neither the primary legislation nor the regulations include a provision delegating power to ASIC to set a minimum amount of cover required for a professional indemnity insurance policy to meet the requirement to be ‘adequate’ under the Act” it said. “Compliance should be driven by a culture of consumer best interest and minimising the risk of consumer harm.”
The submission said that, on this basis, there was a risk of that a proposed delegation of power to ASIC could “self-perpetuate the existing cultural compliance issues as ASIC would make the rules, interpret the rules into regulatory guidance, and enforce the rules”.
“This would create a lack of ‘separation of duty’ between who is making the law and who is enforcing it. Even with the safeguards identified in the Draft Guidance for Delegating Legislative Power, such delegations would give ASIC significant power, which is problematic given the current culture,” the submission said.
Very sensible and evidence-based. Professions self-regulate like Accounting.
Ms Press most go, a one woman wrecking ball of mass BS over compliance.
ASIC needs a big clean out to have any chance of getting rid of 75% of useless, costly, Red Tape bureaucratic madness they have delivered.
Start again from scratch, new regulator, new regulations & new people.
Yep. Medcraft absolutely poisoned ASIC. It needs to be decontaminated, like an old chemical factory building site. Every senior employee who was there under Medcraft needs to be removed.