20 Apr 2016

Government announces ASIC reform package

by Narelle Smythe

ASIC will get greater analytics, surveillance and enforcement powers.

The Government today announced a reform package aimed at bolstering ASIC.  The reforms are the Government's response to the ASIC Capability Review commissioned in July 2015.  That Capability Review was also released today. 

The reforms include:

  • $61.1m will be invested to enhance ASIC's data analytics and surveillance capabilities and improve ASIC's information management systems. This is in recognition of the critical role that analytics and risk assessment can play in identifying and mitigating conduct risk.
  • $57m to enable increased surveillance and enforcement on an ongoing basis in the areas of financial advice, responsible lending, life insurance and breach reporting.
  • Introduction of an industry funding (or user-pays) model, commencing in the second half of 2017. The Government has indicated it will consult with industry to refine and settle the funding models.
  • Appointment of an additional ASIC Commissioner with experience in the prosecution of crimes in the financial services industry.
  • $9.2m for ASIC and Treasury to accelerate the implementation of the following recommendations by the Financial Services Inquiry:
    • introduction of a product intervention power;
    • product distribution obligations for industry to foster a more customer-focused culture;
    • a review of ASIC's enforcement regimes; and
    • strengthening of consumer protections in the ePayments Code to ensure that it keeps pace with emerging technologies.
  • $5.2m for the Superannuation Complaints Tribunal to help deal with legacy complaints and improving general processes.

The Government has also indicated that:

  • it believes there are advantages in extending FOS's current jurisdiction to include a wider range of small business loans as well as conducting a review of monetary limits and compensation caps.  As a result, it has asked ASIC to work with FOS on an immediate review of its jurisdiction; and
  • a panel is to be established to review the financial systems external dispute resolution and complaints schemes and assess the merits of better integrating the schemes to improve the handling of complaints.  The Government will explore the possibility of having a one-stop-shop for the handling of consumer disputes and complaints.

Finally, the Government has also announced that it will recommend the appointment of the current ASIC Chairman, Mr Greg Medcraft, be extended for a further 18 months.

The ASIC Capability Review and the Government's response are available on Treasury's website, as is the ASIC Implementation Plan.

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