Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services, I present the committee’s report, Statutory Oversight of the Australian Securities and Investments Commission, together with evidence received by the committee.

Ordered that the report be made a parliamentary paper.

I want to begin by thanking all the committee members for their hard work and effort in making this report a reality. I also want to welcome the new members to the committee, Senator Helen Coonan, Senator Mark Arbib and Senator Gavin Marshall, and to thank the departing members, Senator Grant Chapman, Senator Andrew Murray, Senator Linda Kirk and Senator Ruth Webber for all of their hard work on the committee over many years. I also want to thank the secretariat, Mr Geoff Dawson, Mr Andrew Bomm and Ms Laurie Cassidy for all their hard work and effort in all the work that the committee does.

The report covers a number of issues relating to ASIC’s regulatory responsibilities. These include their regulation of financial markets, ASIC’s recent strategic review, their continuing response to property investment scheme collapses, financial planner issues and banking and credit regulation.

In particular in relation to financial market regulation, a topic of some great attention in recent times, share market volatility has brought a lot of attention to short selling and margin lending practices, and whether ASIC is monitoring these issues adequately. ASIC told the committee that they had issued public warnings about false and misleading rumours on share trading, and recommended improved disclosure rules on short selling, which the government has agreed to. The committee has encouraged ASIC to maintain greater cooperation with the ASX to crack down more effectively on insider trading and market manipulation.

ASIC is in the process of making some changes to the organisation following its recent strategic review. The committee supports these restructuring plans. They are aimed at making ASIC more responsive to emerging regulatory challenges by better understanding the markets they regulate and taking a more far-sighted and less reactive approach. This is to be achieved by reordering priorities and shifting resources to where they are most needed. ASIC told the committee that they would seek to meet their objectives within the existing budgetary allocation, but may need increased funding if they are given additional regulatory responsibilities.

ASIC has also put a number of measures in place to reduce the chances of another Westpoint-style property investment scheme collapse along with a range of others that took place at that time. These include tougher restrictions on debenture advertising, requiring issuers to disclose against eight benchmarks on an ‘if not why not’ basis, and posting issuers’ disclosure documents on their website. It is encouraging to see ASIC giving this issue the serious attention it deserves, though it has been tardy in doing so in the past, and something that I know consumers will be very appreciative to see change.

In terms of financial planners, a number of issues relating to financial planners were discussed with ASIC, such as the compulsory professional indemnity insurance for planners which has been introduced, and ASIC told the committee that the availability of insurance cover in the marketplace has so far been adequate. The adequacy of compensation available to investors under the Financial Industry Complaints Service was again raised. ASIC suggested that the limit should be raised from $150,000 to $280,000. ASIC has now also responded to the committee’s requests to conduct another shadow-shopping survey on superannuation advice from financial planners. In our view it should not have taken so long, but will now be conducted in the 2009-10 financial year, and the committee asked ASIC a range of questions around that.

In the area of banking and credit regulation, the government’s green paper on financial services and credit regulation posed a number of queries about the effect it will have on ASIC and a number of options.

Finally, reverse mortgages were again raised with ASIC. They told the committee that although there had been few complaints to the regulator about them, likely problems with these products have yet to emerge. But the committee believes that any exposure ASIC can give to this issue in the mainstream press would also be beneficial.

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