Consumer Action welcomes much of the findings of the Senate Standing Committees on Economics Inquiry into the Performance of the Australian Securities and Investments Commission (ASIC), and commends ASIC on its efforts to reform, particularly in their handling of whistleblowers, increasing transparency, proactive identification of emerging risks, and use of enforceable undertakings to deliver good outcomes for consumers.
The Senate Committee made a number of positive recommendations, notably the need for industry to fund more of the watchdog costs under a partial user-pays model (R50), and a proposed boost to ASIC’s consumer advisory panel (R37). Consumer Action raised concerns about the resourcing of ASIC prior to the Budget, and this concern is now heightened following significant cuts to ASIC following the Federal Budget. This can only hamper the ASIC’s ability to undertake proactive market surveillance and enforcement.
The Committee recommended (R3) that ASIC should carefully monitor the implementation of the credit laws, and give particular attention to business models that pose risks to consumers but may not currently be covered by existing legislation. This is a welcome finding, as there is a significant and apparently growing market for businesses that claim to assist people in financial difficulty. These “for profit financial difficulty businesses” often charge very high prices for services that are limited in their benefit, may fail to deliver on the promise, and may even be available free to consumers if they only knew where to look. ASIC is currently limited in what it can do in response as many of these businesses don’t fit neatly within their current area of jurisdiction.
We also support the Committee’s recommendations (R57 & R58) that encourage a refresh of ASIC’s regulatory toolkit to allow it to prevent the marketing of unsafe products to retail investors, and an investigation of whether Australia’s approach to regulating financial services is adequate. We agree that the UK’s Financial Conduct Authority, which has the power to suspend or ban the sale of potentially harmful products, is a model that could work here.
Consumer Action’s submission to the Senate Inquiry can be found here.
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