Is there a fundamental conflict at the heart of ASIC’s new agenda? 

Alex Burke,  Senior Writer,  No More Practice Education

Last week, we discussed what could become a "new era" in advice regulation – based on early evidence including ASIC's appointment of new chair Joe Longo, the reversal on the adviser levy and Treasurer Josh Frydenberg's Statement Expectations for the regulator. 

It's difficult to determine how and to what extent these changes will manifest over the long term – certainly, advisers would welcome a more accommodating approach to the sector, if the levy reduction is anything to go by – but according certain parts of the political spectrum, Frydenberg's statement represented something of an ill omen. To Labor MP Stephen Jones, for example, the Treasurer's expectation that ASIC "identify and pursue opportunities to contribute to the Government's economic goals" was a "direct repudiation of the findings of the Banking Royal Commission." 

While not as forceful as Jones in his commentary, fellow Labor MP Daniel Mulino also observed "tensions" in ASIC's renewed list of priorities and asked Longo about them directly during a parliamentary committee hearing. 

In response, Longo said he took Frydenberg's statement in a more nuanced way, adding: "The government has published expectations, but they are entirely consistent with the legislation we're required to administer ... We have to administer the law ... in a sensible way, a reasonable way that enables business to be successful. We don't prescribe standards that are beyond the law, we're not too legalistic in the way in which we administer the rules so that businesses can prosper and people can have jobs and there's a functioning economy. 

"That is a fundamental objective in our legislation. Consistent with that objective, we have to enforce the law too."

The committee's chair, Liberal MP Tim Wilson, also referenced Longo's stated priority that ASIC support Australia's post-COVID economic recovery, asking: "Ultimately, is that ASIC's job?"

Referencing ASIC's broad remit as a corporate and market regulator, Longo said ASIC "has a fundamental objective to encourage business and consumers to participate lawfully but confidently in the Australian economy."

"That's a key part of what we do," he continued. "We do that in all sorts of ways: in the way in which we regulate capital raising and the way in which we try to protect consumers so they can be aware of their rights and get proper access to financial advice. There's a whole range of things, as we know from our own lives, which contribute to financial wellbeing in a functioning economy. 

"So that's part of our job; it's something that we take very seriously. Equally, and I say 'equally', because I don't think – and none of the commissioners think – that pursuing that fundamental objective should come at the expense of credible, targeted and proportionate law enforcement. That's our job too. We have to do both. We've been doing that for a long time, and we will continue to do that." 

Longo's referencing of the "contribution to financial wellbeing" that advice represents echoes his previous comments on the topic, when he said he was "concerned" about the sector and would make it one of his priorities to "see what can be done to address the issue." And certainly, a version of ASIC that proactively engages with the advice sector to support its function in the community would be beneficial for an industry that's been on the ropes for some time. 

However, as Mulino implied, that version of ASIC will also have to contend with the one whose partial purpose is to support the economic goals of the Government of the day. Perhaps there is no conflict here, as Longo suggests, but advisers would know well by now just how much of an impact the Government expediting its legislative agenda – and ASIC enforcing it – can have on an industry. 

Will ASIC manage to strike a balance here? We'll see. 


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