I’d like to begin by thanking the Governance Institute, and its CEO, Tim Sheehy, for hosting this significant event.
My apologies for not being with you in person; this week I’ll be accompanying the Prime Minister on his trip to the Torres Strait Islands, as part of the PM’s commitment to spend a week every year working alongside our community in a remote indigenous region.
Though I can’t be there, I didn’t want to miss this opportunity to be part of a high level conversation about ASIC and its future.
The Governance Institute has a long history of contributing to corporate governance policy in Australia, and I’m sure your 7000 members are the first to appreciate the importance of a strong, independent and accountable regulator.
Today, I want to briefly discuss what the Government sees as the priorities for ASIC, and identify some of the emerging challenges it will face.
The importance of ASIC really can’t be overstated. ASIC plays a key role in maintaining trust and confidence in the economy and those who operate in it.
The breadth of ASIC’s remit – spanning corporate, markets, financial services and consumer credit – is substantial.
Let me put some numbers on it.
- over 2 million registered companies and over 2 million business names;
- around 5,800 credit licensees;
- approximately 5,200 financial services licensees;
- over 22,000 financial advisers;
- over 700 registered liquidators;
- almost 5000 registered company auditors;
- 164 authorised deposit-takers; and
- 156 superannuation fund trustees.
On the enforcement side, in the 2014-15 financial year, ASIC has seen:
- over $36.5 million in compensation awarded to Australian consumers and businesses;
- 24 criminals convicted;
- 88 people banned; and
- 20 enforceable undertakings implemented.
I would also like to acknowledge ASIC’s efforts in contributing to the Government’s red tape reduction targets. Since September 2013, ASIC has achieved almost $400 million in compliance savings for business.
Just last month, ASIC finalised a significant digital disclosure initiative which will achieve regulatory savings per year of over $299 million, and in the process revolutionise the delivery of disclosure documents in the financial services sector. I continue to encourage ASIC to find ways to deliver win/win outcomes that lower costs to industry, while at the same time improving consumer outcomes.
That’s just a glimpse of ASIC’s responsibilities and activities, but its larger role, of course, is to help sustain efficient and well-functioning markets and consumer confidence. This is a role that we all need ASIC to perform to the highest possible standard.
Nevertheless, there are challenges ahead.
You only have to look around to see unprecedented and rapid change in a range of industries. This is driven by a range of factors, like globalisation, international regulatory initiatives, technological innovation, new business models, demographic shifts, and an evolving competitive landscape.
ASIC must adapt to these changes to remain effective.
In the finance industry, the pace of technological change especially has accelerated over the past decade. The challenge for ASIC is to smooth the path of this innovation while still managing the risks it may present to consumers.
And while innovation may increase complexity and difficulties in regulation, it also allows ASIC to improve its own operations and supervisory activities.
Technological change undoubtedly presents huge opportunities to reduce costs, deliver enhanced services to consumers, and better engage with stakeholders, but it also raises issues of identity, privacy and cyber security.
These matters will no doubt be central to the Capability Review that is currently underway and which I will have more to say about shortly.
The Financial System Inquiry made several recommendations that are relevant to ASIC.
- expanding ASIC’s regulatory toolkit;
- introducing an industry funding model for ASIC;
- strengthening competition in the financial sector every three years; and
- including competition in ASIC’s mandate.
If these recommendations are progressed, we will have a very different ASIC: one with expanded powers and even greater responsibilities.
The Government’s response will be released shortly and we’ll be working closely with a wide range of stakeholders on implementation.
As you know, we are also looking at commercialising the ASIC Registry.
The Government is undertaking a competitive tender process to see whether a private sector provider could upgrade and operate the ASIC Registry and develop value-added products.
A scoping study found no specific advantages of government operating the Registry, and also pointed to the ageing IT systems that can’t support greater electronic lodgement. If they’re not upgraded, the current systems would leave Australia a less competitive place to do business.
Commercialising the Registry would also free up ASIC to focus on its core role, rather than the data management and IT function of the Registry.
Nevertheless, above all, commercialising the Registry is about improving the user experience and providing better access to the Registry data.
As I alluded to earlier, to ensure that our financial regulator remains fit for purpose, now and into the future, on 24 July we launched a Capability Review of ASIC.
The FSI recommended that all regulators undergo periodic capability reviews. The ASIC Capability Review will assess how efficiently and effectively ASIC uses its current resources and powers to meet its regulatory responsibilities, and how well-placed it is for the challenges and changes ahead. It’s expected to be completed by the end of the year.
Let me introduce you to the Capability Review expert panel, who I believe are in the audience with you today.
The Chair is Ms Karen Chester. Karen is a full-time Commissioner at the Productivity Commission. She’s held senior public service roles, and was previously a partner in Mercer’s global investment business.
Mr Mark Grey has held Chief Executive positions with the Queensland Treasury, the Queensland Competition Authority, the Queensland Commission of Audit and senior executive positions with the Macquarie Group and BDO.
And Mr David Galbally AM QC is a partner at Madgwicks Lawyers and has extensive experience in commercial litigation and dispute resolution, including matters relating to corporate governance.
The panel is expertly placed to assess the capability of ASIC – looking across its various functions and responsibilities. I’ve already met with the panel members to give them my thoughts on the scope and focus of this review. I conveyed to them that I am very interested in their insights on ASIC’s skill set, processes and policy toolkit – all with a view to making ASIC an even more effective regulator.
The panel will consult extensively with private sector businesses regulated by ASIC, peak bodies, regional and consumer representatives and other stakeholders.
As I said, Karen, Mark and David are there with you, which I think demonstrates their eagerness to engage and understand the views of all stakeholders.
Let me encourage you all to contribute to this vital review. This review provides you with a unique opportunity to have a say about ASIC’s priorities; the skills and resources it needs; and how it can more effectively discharge its mandate.
Thanks for your attention, and I wish you well in your discussions today.