Helen Coonan (NSW, Liberal Party, Shadow Minister for Human Services) Share this | Hansard source

I rise to speak briefly on the Statutory oversight of the Australian Securities and Investments Commission report. As the newly appointed deputy chair of the committee, I am pleased to have the opportunity to contribute to better regulation of corporations and the financial services industry in Australia. It is an area of great interest to me. I was very interested in Senator Boyce’s comments and her presentation and the issues that she raised in relation to this report. I also want to pay tribute to the hard work of former members—they have been mentioned of course by Senator Boyce—as well as give a little note of consideration and of appreciation to the secretariat. They always do sterling work. In this particular case we have Senate legend Cleaver Elliott standing in for Geoff Dawson, together with Andrew Bomm as principal research officer and Ms Laurie Cassidy in the sometimes thankless task of executive assistant. I look forward to working closely with them over the hearings of this committee, wherever they may be held.

As I have only very recently been appointed to the committee, I was not involved in this report’s preparation or deliberations. Nonetheless, I am pleased that the committee has given consideration to issues that are of enormous significance to the proper functioning of the share market and the regulatory surveillance that is necessary to achieve this. The turmoil in the share market in February certainly highlighted some of the regulatory gaps that exist in how Australian markets are regulated. Concerns that undisclosed covered short selling—where shares are borrowed, sold, repurchased at a lower price and returned for a profit—is affecting market transparency and encouraging illegal market manipulation have been raised at numerous times over the year to date. This report identifies the issues surrounding margin lending and short selling in Australia, especially in light of the collapse of Opes Prime and Lift Capital due to investors not being aware of the unsecured nature of their holdings.

During the public hearing on 18 June this year, ASIC were questioned on whether they were monitoring margin lending and short selling adequately. ASIC told the committee that they had issued public warnings about false and misleading rumours on share trading and recommended improved disclosure rules on short selling. The committee’s view was that ASIC should maintain greater cooperation with the ASX to prevent insider trading and market manipulation.

Following ASIC’s strategic review, it was decided they could more effectively function if they restructured their operations. This includes restructuring the organisation from four silo directorates to 17 outwardly focused and outward-facing stakeholder teams. ASIC’s restructuring plans will provide a greater emphasis on understanding and conducting surveillance of financial market activities. ASIC have also been pursuing tougher restrictions on debenture advertising to reduce the chances of another Westpoint style property investment scheme collapse as well as monitoring the availability of insurance cover in the marketplace since the introduction of compulsory professional indemnity insurance for financial planners.

With the government’s looming federal takeover of corporate regulation, as mooted in the government’s green paper, a number of queries about the effect it will have on ASIC were raised. As the options outlined in the green paper have not yet been finalised, ASIC reported that the effects are not yet known; they can only anticipate what they might be. I do look forward to seeing Senator Sherry’s finalised proposals with much interest.

Finally, reverse mortgages were again raised with ASIC. Although there have been few complaints to the regulator about reverse mortgages, ASIC anticipates that a number of problems with these products may yet surface. The coalition supports the committee’s comments that ASIC should continue to use all avenues available to it to educate consumers about the risks associated with reverse mortgages. The committee is of the view that coverage in the mainstream press is far more effective than on ASIC’s website and thus media coverage should be a significant objective for ASIC to aim for to help ensure better outcomes, particularly for the elderly.

I anticipate and apprehend that comments in respect of further reports may be a bit more comprehensive than my comments in relation to this report, but I do commend it to the Senate and I look forward very much to participating in future debates and reporting the committee’s deliberations to the Senate.

Question agreed to.