Tim Wilson (Goldstein, Liberal Party) Share this | Hansard source

On behalf of the Standing Committee on Economics, I present the committee's report entitled Review of the Australian Securities and Investments Commission annual report 2018 together with the minutes of proceedings.

Report made a parliamentary paper in accordance with standing order 39(e).

by leave—On 16 October 2019, the committee scrutinised the Australian Securities and Investments Commission on its performance and regulatory responsibilities. This was the committee's first hearing with ASIC since the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry released its final report.

The royal commission found that Australia's financial sector suffered from a lack of moral leadership and a corporate culture motivated by greed. Evidence provided to the royal commission exposed shocking and widespread examples of misconduct and highlighted systemic failures throughout the banking and financial services sector. Revelations of further misconduct have continued to come to light following the conclusion of the Hayne royal commission.

The community expects the big banks and other financial institutions to be held to account and to fear their regulator. However, the royal commission found that ASIC had a deeply entrenched culture of negotiating outcomes rather than insisting upon public denunciation of and punishment for wrongdoing. Commissioner Hayne emphasised that compliance with the law is not a matter of choice and that negotiation and persuasion without enforcement all too readily lead to the perception that compliance is voluntary.

The government has been working to implement the royal commission's recommendations and strengthen financial regulators to ensure a fair, strong and efficient financial system for all Australians. In April 2019 the government introduced a design and distribution obligations regime for financial firms as well as product intervention powers. This will assist consumers to obtain appropriate financial products by requiring issuers and distributors to have a consumer-centric approach by designing, marketing and distributing financial products. It will also allow ASIC to regulate or, if necessary, ban potentially harmful financial and credit products where there is a risk of significant consumer detriment.

In this report the committee scrutinised ASIC's progress in implementing these reforms recommended by the royal commission. It considers ASIC's program of change, including its new enforcement strategy, which focused on increased and accelerated court based outcomes and the use of new and tougher penalties. ASIC's more intensive supervisory approach aims to improve the culture and behaviour of financial firms. The committee also scrutinised the advice that ASIC is providing to the public for accuracy.

It is essential we restore trust, eliminate conflicts of interest and raise standards of professionalism in Australia's financial services industry. This will require not only the efforts of government and regulators but also the efforts and actions of leaders and individuals within the sector.

The committee also scrutinised the activities of ASIC outside the focus on the Hayne royal commission, in particular focusing on a number of issues, such as advice that ASIC is providing in the public square around the costs and structures of self-managed super funds. As chair, I raised a specific question about their fact sheet, which made the case that the cost of administering a self-managed super fund is $13,900 a year. In that inquiry I outlined that I disagree with that assessment, and I have requested the Australian Taxation Office to provide the evidence base that ASIC claims is the justification for producing such a number in the interests of the public. The Australian Taxation Office has agreed to do so, and I look forward to them reporting publicly about the factual, accurate cost of running a self-managed super fund into the future. I would suggest to the Australian Securities and Investments Commission that they look at and review their documentation in light of that new data and consider whether it properly informs the Australian people, enabling them to fulfil their proper, accurate function to inform the Australian community.

On behalf of the committee, I thank the chair of ASIC, Mr James Shipton, and other ASIC representatives for appearing at the hearing. I also thank the committee secretariat, who always do a very diligent job, particularly given a challenging chair such as myself. I commend the report to the House.

See this speech in context