Auditor General warns on regulatory capture
The Australian National Audit Office (ANAO) has sent a strong message to the financial services regulators about the need to maintain independence from the organisation or individuals they regulate to avoid regulatory capture.
The key message from the ANAO followed an audit of the regulator overseeing bankruptcy laws and the Personal Property Securities Register – the Australian Financial Security Authority (AFSA) which identified shortcomings.
The ANAO audit concluded that AFSA management of conflicts of interest had been “partly effective”.
“AFSA’s processes for declaring, managing and overseeing conflicts of interest resulted in arrangements not being sufficient to manage conflicts of interest in a regulatory operating environment. The arrangements in the control framework had not been effectively operationalised,” the audit conclusion said.
“AFSA has developed partly appropriate arrangements to manage conflicts of interest. As a financial regulator, AFSA has not sufficiently articulated conflict of interest risks and controls in its risk management artefacts nor identified regulatory capture as a risk,” it said.
The audit report stated:
Deficiencies in AFSA’s processes for declaring and managing conflicts of interest were identified which related to:
- annual declarations of material personal interests not being completed by all applicable Senior Executive Service (SES) staff;
- annual governance committee conflict of interest declarations not being completed by all applicable personnel;
- insufficient records to support whether disclosed material personal interests and conflicts were subsequently reviewed to determine if conflict mitigation strategies were required;
- gift and benefit declaration processes not requiring recipients or approvers to document whether the acceptance of a gift, benefit or hospitality may give risk to an actual, potential or perceived conflict of interest;
- no processes to review outside employment applications on an annual basis in accordance with AFSA’s internal policy requirements, and one approved outside employment application not satisfying AFSA’s internal policy requirements;
- recruitment conflict of interest declarations not being completed by all relevant AFSA personnel; and
- insufficient arrangements to maintain oversight of conflict of interest declarations that were previously made by AFSA staff.
The findings resulted in the ANAO issuing a key message for all Australian Government entities:
“Public officials have a duty to disclose and manage personal interests that may create a conflict of interest. Conflicts of interest can be a source of internal fraud and corruption risk. They pose a particular risk for regulatory entities,” the ANAO message said.
“Regulatory entities need to maintain independence from the organisations or individuals they regulate to avoid regulatory capture. Implementing effective policies and procedures to manage individual and enterprise integrity risks ensures that entities can be confident that conflicts are not impeding the delivery of their objectives.”
ASIC & APRA have been Regulatory Capture Corrupted for decades and the whole best buddies relationships with Union & Bikie Super / Industry Super is full of rorts, kick backs & undeclared celebrations at Union Supers corporate sport boxes.
Govt Regulators don’t even bother to have correct procedures in place to monitor their own corruption.
Canberra is a Corrupted swamp that needs to be drained.
And what will be done ? NOTHING
A timely warning from ANAO. ASIC and Treasury were long ago “captured” by the interests of union super. This has been a key driver of their bias and persecution campaign.
In more recent times it would appear these same regulators have been captured by Canberra bureacrats who lost money trying to be “clever”, investing with Dixons. This has led to CSLR being implemented in an utterly unfair manner, designed to slug completely innocent advisers with extra costs to pay for those bureaucrats’ personal losses.
I wonder whether they will write to the TGA and lecture them on regulatory capture. With 95% of their funding coming from the industry they “regulate” they are the definition of captured.
Well Regulatory Capture is really he who has the biggest cheque book, Hence influence on the regulator.
Be it Union/Industry Fund or the Big Banks.
Cheque Book Democracy is where it is all lost. As well as Career ambitions, Don’t upset the apple cart of your future employer and the pay day you have been looking for.
Us the advisers either get into the game or keep being the whipping boy