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

ASIC previously advised that, since the transfer of responsibility, the time from problem identification to formal investigation has decreased. The committee is particularly pleased to see that this trend has continued and trusts that it will continue to do so in the future. It will form the basis of ongoing inquiry.

It is clear though that there are other emerging issues that may affect the performance of Australia's domestic licensed markets, including dark pools, high frequency trading and white-label or indirect brokers. We are extremely interested in these and other areas of potential risk and so will continue to seek ASIC's assessment of emerging risks, and the development of regulations to address them. To assist with notifying the market about risk, the committee considers it appropriate for ASIC to continue to publish six-monthly reports regarding the Commission's supervision of markets and participants.

In relation to Australian financial services licenses, the committee continues an interest in this particular area. The awarding of and subsequent use of Australian financial services licenses continues to be a significant focus for the committee. The committee was informed that the Corporations Act contains a presumption in favour of granting applicants an Australian financial services licence and that sometimes there is a perception that some inappropriate people are granted one of these very special licenses. However, on the basis of evidence provided to the committee, it was not clear that the presumption in favour of granting a licence does undermine market integrity in any particular way.

What did concern us was the potential for misperceptions, amongst investors and consumers, of the significance of an AFSL, which may result from licensees claiming their product or advice is ASIC approved—the moral hazard in having the ASIC approval stamp on a product, when having that licence or stamp does not in any way give any favour to approval or otherwise of the merits of that particular product; it only shows only that the product complies with regulation and law. For this reason, the committee has recommended in this report that ASIC amend its website to include an explanation of the meaning and significance of holding an Australian financial services licence and what that means to people making assessments about the people who hold them, the type of investments they make or the recommendations that may come from people who are the holders of an AFSL.

In conclusion, the committee holds its next hearing with ASIC in October and looks forward to the opportunity to discuss these and other issues further. I would like to particularly thank the secretariat for their assistance in preparing this report and other reports and their ongoing good work in the complex and sometimes difficult matters that the committee deals with.

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