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 entitled 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 am pleased to speak to the February 2010 report of the Parliamentary Joint Committee on Corporations and Financial Services on the statutory oversight of ASIC and the report on the 2008-09 annual reports of bodies established under the ASIC Act.

I would like to firstly thank the secretariat for their assistance in preparing these reports and I thank ASIC officials for their continuing cooperation with the committee. The ASIC oversight report covers a number of issues, including ASIC’s processes for handling complaints, credit regulation and frozen mortgage funds. The committee explored a recommendation ASIC issued in its 2009 report on financial products and services, for a professional standards board. ASIC’s failed One.Tel prosecutions and insolvency matters were also discussed.

In terms of complaint handling, the committee’s 2009 inquiry into financial products and services raised a number of concerns about ASIC’s investigative processes. Of particular interest to the committee was ASIC’s process of handling complaints received about misconduct and suspected legislative breaches. At the committee’s hearing on 25 November 2009, ASIC stated that complaints are addressed by 98 full-time employees and that they had met their target of turning around 70 per cent of complaints within 28 days during the last reporting period. The committee remains keen to learn more about ASIC’s capacity to receive and resolve complaints and will be carrying out a site visit to the ASIC complaints headquarters in Traralgon, Victoria in the first half of 2010. We are in the process of doing that. It is somewhat complicated trying to get a whole committee and ASIC officials to Traralgon, but we are certainly on our way to achieving it in our nominated time frame.

ASIC gained a number of additional responsibilities with the 2009 consumer credit reforms. These responsibilities include licensing consumer credit providers and being the national regulator of the new code. The committee has noted ASIC’s efforts to prepare for the legislation by 1 July this year; however, there is concern that this is a substantial task to add to ASIC’s existing workload. The committee will be seeking information from ASIC at future oversight hearings about how it is balancing its new responsibilities.

In terms of frozen mortgage funds, a freeze on redemptions from cash management trusts and mortgage funds continues. ASIC has reported that hardship payments have been made to some 2,293 applicants, yet frozen funds still amount to around $17 billion to $20 billion. The committee also heard that the freeze has restricted a fund’s ability to attract new investment. ASIC has been asked to provide the committee with updates on this at future oversight hearings.

In terms of the professional standards board—which I think was a key platform, certainly one of the 11 recommendations that the committee made during its recent inquiry—the committee’s 2009 report on financial products and services recommended the establishment of an independent professional standards board in conjunction with ASIC, to regulate financial advisers. The board would oversee nomenclature, competency and conduct standards for the industry. ASIC agreed with the recommendation but noted that the idea would require further investigation. The committee looks forward to being advised on how the proposal could be actioned in the future.

In terms of some criticism of ASIC-initiated court actions, recent events have led to criticism in the media and in the industry of ASIC’s prosecution processes. For example, at the conclusion of its case against two One.Tel directors, the New South Wales Supreme Court stated that ASIC had failed to prove any aspect of its case. The committee acknowledges that it is not realistic to assume that all such cases will be successful. Nevertheless, the recent events suggest that there is still room for improvement and that ASIC could do better in these areas. This matter will be further discussed with ASIC at future oversight hearings.

Finally, in terms of insolvency matters, ASIC is responsible for enforcing the provisions of the Corporations Act, including those pertaining to insolvency matters. The committee was interested in ASIC’s handling of complaints about the conduct of insolvency practitioners, and it continues to be so given that there is currently an inquiry by the Senate Economics References Committee into that very matter.

The committee also welcomes ASIC’s efforts to proactively identify for additional scrutiny directors who have been involved in multiple company failures. I thank the committee for its hard work not only in the previous inquiry but also in the workload for this year, including a restructure of the way that we will be dealing with oversight hearings. I look forward to the cooperative approach that this committee has enjoyed and the bipartisan manner in which all members have participated in the national interest. I thank all committee members for that.

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