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

I present the report of the Parliamentary Joint Committee on Corporations and Financial Services, 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.

In presenting this report, at the outset I thank David Sullivan and the other staff of the secretariat of the Joint Standing Committee on Corporations and Financial Services for their assistance with this inquiry and report. It is part of the statutory role which the committee has in regularly conducting oversight hearings with the Australian Securities and Investments Commission. In that context, I would also like to thank the officials of ASIC for their ongoing cooperation with the committee and their participation in particular at our last public oversight hearing with them on 30 November 2006 and at the subsequent hearing.

The report covers a number of issues pertaining to ASIC’s responsibilities. These include: recent property investment scheme collapses, bank conduct and dispute resolution procedures, ASIC’s monitoring of superannuation advice, professional indemnity insurance for planners, ASIC’s review of the electronic funds transfer code of conduct, and ASIC’s investigation procedures.

Unfortunately, the committee’s previous concerns over further high-risk, Westpoint style property scheme collapses have eventuated, leaving investors facing losses of hundreds of millions of dollars. ASIC informed the committee that it will be taking a new approach to such investment schemes. This includes making an assessment of the viability of the business models of existing schemes, intervening to improve the business model of new schemes and their disclosure, and improving investor education. The committee welcomes this initiative but believes it should have been implemented before these predicted collapses eventuated.

The committee has received a number of complaints recently about banking practices, particularly the nonprovision of bank statements. The volume of complaints has raised concerns over the adequacy of banks’ own dispute resolution procedures, though ASIC suggested there was no systemic problem in this area. The committee has asked ASIC to investigate a number of complaints and any further action will be dependent on their response. I note that, since we have requested that of ASIC, they have recently written back to me as chairman of the committee indicating they are going to undertake a number of investigations into this matter. The request by the committee is also undertaken in the context of the inquiry and report that we did on the issue of nonprovision of bank statements and shadow ledgers several years ago.

There does seem to be a regulatory dead end for business loan customers seeking external resolution to their banking disputes, with ASIC expressing a reluctance to investigate possible individual breaches, initially, of the unconscionability provisions of the Corporations Act, preferring to focus on systemic problems. But, as I say, I welcome the recent positive response from ASIC on this matter, which has happened subsequent to our oversight hearing.

In our report, the committee expresses disappointment that ASIC has not committed to conducting another superannuation shadow shopping survey. The last such exercise was effective, identifying widespread instances of inappropriate superannuation advice, and lead to AMP Financial Planning undertaking a full review of advice it had given to its clients. The committee therefore recommends that ASIC conduct another shadow shopping exercise before the end of 2007. However, in that context, it should also be noted that sections of the financial planning industry dispute some of the findings of the previous shadow shopping survey. ASIC should be mindful of these concerns of sections of the industry in this dispute in conducting future shadow shopping exercises.

The professional indemnity insurance regime to cover financial planners is expected to be in place by 1 January 2008, according to ASIC. The committee is concerned that professional indemnity insurance will not be available to all existing financial planning firms and will monitor the implementation of the new regime.

ASIC also told the committee that it did not support a change in the electronic funds transfer code of conduct to shift liability for internet banking scams onto customers.

Finally, a recent Australian National Audit Office report found that an increasing number of complaints of suspected breaches of the Corporations Act had been referred to ASIC but that it had been undertaking fewer investigations on these reports. ASIC told the committee that this lower rate of investigation had been offset by preventative surveillance and that additional government funding would allow it to increase its rate of investigation. Having accepted the recommendations of the Audit Office’s report, the committee encourages ASIC to act on them promptly. I commend the report to the Senate and seek leave to continue my remarks.

Leave granted; debate adjourned.