Australia’s corporate watchdog, ASIC, is facing a review by the federal government following a recommendation from the Murray Inquiry and ASIC’s failure to prevent the recent failures of governance and resultant misconduct in the financial planning industry.
Fairfax reports this morning that the review, which will look at ASIC’s capabilities and how it uses its powers, will be announced by assistant treasurer Josh Frydenberg today.
Chairing the review will be Karen Chester, commissioner with the Productivity Commission, barrister David Galbally and former QTC boss Mark Gray.
The key area of focus will be how ASIC “identifies and prioritises immediate and future risks, and how it allocates resources between surveillance, education, policy enforcement and litigation,” Fairfax said. Importantly the corporate watchdog’s own culture and the capability of its staff will also be under the microscope.
Currently ASIC receives $300 million a year from the government but the review will be looking at whether or not the funding structure should be changed to a user-pays model with industry funding its own regulator. That’s the process used to fund Australia’s banking regulator and ASIC chairman Greg Medcraft has been pushing for this model as the best outcome for the government.
Such a move to industry funding is likely to result in a material increase in funding for the regulator as it works with industry to ensure better regulation and compliance. That implies an increase in the cost of financial services but also “greater cost accountability”, the Murray inquiry said.
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