Watchdog wants more teeth to fight corporate misconduct
The proposals are part of the Australian Securities and Investment Commission's 200-page submission to a Senate inquiry into its performance.
They include calls for greater whistleblower protections and a national exam for financial advisers that would prevent "bad apples" from working in the industry.
The submission marks a philosophical shift for the regulator, calling into question its role in governing markets and calling for policy changes to allow greater intervention into suspected misbehaviour.
"These proposals would improve ASIC's ability to deliver on our legislative responsibilities and increase our effectiveness," it said.
The inquiry into ASIC follows scathing criticism of the regulator following Fairfax Media revelations of serious misconduct and a cover-up by Commonwealth Bank's financial planning arm and the failure of ASIC to act promptly.
While ASIC defended its role in the CBA affair, it recommended a number of policy changes, including enhanced search warrant powers.
"ASIC's investigative tool kit is lacking in relation to its search warrant powers, leading to inefficiencies and delays, and is not adequate to meet the complexity of modern corporate and financial investigations," it said.
"A simple but effective change would be to expand the search warrant powers in the ASIC Act."
It also called for harsher penalties for corporate crimes and questioned the "conduct and disclosure" approach that defined its role as watchdog.
"Internationally, regulators are looking for a broader tool kit to address market problems, moving beyond traditional conduct and disclosure regulation to design regulatory interventions that address the types of problems investors and financial consumers often experience in financial markets."
The conduct and disclosure approach is guided by the theory that markets need minimum regulation to work efficiently.
The CBA financial planning scandal resulted in the banning of seven planners who controlled hundreds of millions of dollars of client money. ASIC extracted a two-year enforceable undertaking in October 2011 despite being tipped off in late 2008 by a group of CBA insiders who wrote to ASIC warning it what was going on.
In its submission, ASIC called for an extension of whistleblower protection to include contraventions of criminal legislation.
Frequently Asked Questions about this Article…
The corporate regulator, ASIC, is seeking more investigative powers to enhance its ability to tackle corporate misconduct effectively. This includes expanding search warrant powers to address the complexities of modern financial investigations.
The corporate regulator, ASIC, is proposing more investigative powers and tougher penalties for white-collar criminals. This includes enhanced search warrant powers and greater whistleblower protections.
ASIC is proposing several changes, including tougher penalties for corporate crimes, greater whistleblower protections, and a national exam for financial advisers to prevent 'bad apples' from working in the industry.
ASIC believes that its current search warrant powers are inadequate for the complexity of modern corporate and financial investigations, leading to inefficiencies and delays. Expanding these powers would improve their effectiveness.
ASIC plans to address white-collar crime by advocating for tougher penalties and expanding its investigative toolkit, which includes enhanced search warrant powers to reduce inefficiencies and delays in investigations.
ASIC is calling for a national exam for financial advisers, which would help prevent individuals with poor conduct from working in the industry.
The national exam for financial advisers is significant because it aims to ensure that only qualified and ethical individuals can work in the industry, thereby protecting investors from misconduct.
The inquiry was prompted by criticism of ASIC following revelations of serious misconduct and a cover-up by Commonwealth Bank's financial planning arm, and ASIC's failure to act promptly.
ASIC's submission reflects a philosophical shift by questioning its traditional role and advocating for policy changes that allow greater intervention in suspected misbehavior, moving beyond the 'conduct and disclosure' approach.
ASIC is advocating for harsher penalties for corporate crimes to better deter misconduct and enhance accountability in the financial sector.
The Senate inquiry into ASIC's performance was prompted by criticism following revelations of serious misconduct and a cover-up by Commonwealth Bank's financial planning arm, and ASIC's delayed response to these issues.
ASIC's proposal marks a philosophical shift by questioning its traditional role and advocating for policy changes that allow greater intervention in suspected misbehavior, moving beyond the conduct and disclosure approach.
Whistleblower protection is a key component of ASIC's proposals, as it seeks to extend protections to include contraventions of criminal legislation, encouraging more insiders to report misconduct without fear of retaliation.
The 'conduct and disclosure' approach is based on the theory that markets need minimum regulation to work efficiently. However, ASIC is questioning this approach and seeking broader regulatory tools.
ASIC is questioning the 'conduct and disclosure' approach because it believes that a broader regulatory toolkit is needed to address the types of problems investors and financial consumers face in financial markets.
Whistleblower protections are a key part of ASIC's proposals, as they aim to encourage insiders to report misconduct without fear of retaliation, thereby enhancing the regulator's ability to address corporate wrongdoing.
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