On 3 July the Senate Economics References Committee handed down its report on ASIC. The Senate referred an inquiry into ASIC in October of 2022 to examine the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct. The report is generally critical of ASIC's performance as a corporate regulator. The report identifies several key issues. Chief among these is the broad remit of ASIC, ASICs approach to investigation and enforcement, and ASICs wider culture.
The report makes a number of recommendations, these include:
Separate functions
The report recommends that the government should consider separating the functions of ASIC between a companies regulator and a separate financial conduct authority. The Report notes the challenges of ASIC to fulfil its current remit due to its breadth and considers that the bifurcation of ASIC may assist it in better tackling its remit.
New approach to misconduct
The reports proposed making it a legislative requirement of ASIC or a future regulator to investigate reports of alleged misconduct at an appropriate rate and suggests that standards be developed to transparently report on ASICs response.
Amended funding model
The report also suggests reassessing the funding arrangements for ASIC to potentially increase funding directly resourced with the proceeds of regulatory fines. This would more closely follow the structure in other jurisdictions such as the United States and may result in ASIC or any alternative regulatory authority being considerably more active in its enforcement activities.
If the recommendations in the Report are adopted, we consider that ASIC's approach in respect of investigations and enforcement would likely become more proactive and potentially more regular.
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