Grant Chapman (SA, Liberal Party) Share this | Hansard source

I present the report of the Parliamentary Joint Statutory Committee on Corporations and Financial Services entitled Statutory oversight of the Australian Securities and Investments Commission, together with the Hansard record of proceedings.

Ordered that the report be printed.

I seek leave to move a motion in relation to the report.

Leave granted.

I move:

That the Senate take note of the report.

I would like to thank David Sullivan and the staff of the secretariat of the Joint Committee on Corporations and Financial Services for their work on this report, as well as ASIC officials for their ongoing cooperation with the committee and their participation in the committee’s public hearing on 30 November 2006.

This report relates to the statutory role of my committee under the Corporations Law to oversee ASIC. The committee generally fulfils this role by conducting public hearings periodically with ASIC commissioners and senior staff. The report that I have tabled covers a number of issues pertaining to ASIC’s responsibilities. The main issues addressed include ASIC’s first report on superannuation fees and costs, professional indemnity insurance for financial services licensees, the Westpoint collapse and the implications for ASIC of the Cole commission report.

The committee welcomes ASIC’s first of five reports monitoring fees and costs in the superannuation industry. ASIC noted that the methodology they used was limited by its reliance on information in funds’ product disclosure statements, which reflect the maximum a customer may be charged rather than actual charges applied. However, this ongoing survey is a useful attempt to monitor trends in superannuation fund fees and will assist to encourage more competitive fees and charges in the industry.

After a long period of consultation, it seems that professional indemnity insurance will soon be prescribed as the required compensation arrangement for claims by clients who suffer losses due to breaches of the Corporations Act. Although this is generally a welcome development, there are concerns that small financial planning firms may not be able to obtain sufficient insurance cover. ASIC indicated that they were investigating the supply and demand issues that may flow from any regulatory change in this area. Should professional indemnity insurance be unavailable, some small firms may have to align themselves with others who have obtained such cover.

The Westpoint collapse continues to create concern over the possibility of similar mezzanine schemes causing further investor loss. The failure of ASIC’s court action to close the loophole allowing Westpoint style schemes to raise funds outside ASIC’s jurisdiction is of concern. The committee has recommended that ASIC continue to seek an amendment to the disclosure requirements in the Corporations Act to increase the $50,000 threshold applying to promissory notes.

Finally, ASIC reported on its role in pursuing action arising from the Cole recommendations relating to AWB Ltd. The committee was informed that specific legislation to enable ASIC to obtain evidence relating to this matter is currently under consideration by the government. As to whether current legal professional privilege laws could be used to obstruct any future ASIC investigation into AWB, the committee was told that it was too early to tell. The committee awaits the current inquiry into legal professional privilege and Commonwealth regulatory agencies by the Australian Law Reform Commission. I commend this report to the Senate.