House of Representatives Standing Committee on Economics - Opening statement - 29 March 2021
Opening statement by ASIC Chair James Shipton at the House of Representatives Standing Committee on Economics, 29 March 2021, Parliament House, Canberra.
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Thank you Chair for the opportunity to appear before this committee.
ASIC is an agency with a remit that is broader than almost any equivalent regulator elsewhere in the world.
Thus, while the few matters that stir controversy grab headlines, the vast bulk of the important work undertaken by our dedicated and diligent staff goes mostly unremarked.
ASIC can very be proud of its work, impact and strategic agility.
Equally, we can also be very proud of our genuinely community-minded spirit, which was clearly demonstrated through our community focused work during the pandemic.
In 2018, we started a strategic change program to bolster the impact and effectiveness of our organisation.
- This has resulted in a more structured strategic planning process that is built around addressing key threats and harms.
- Importantly, we have also focused on building up ASIC’s capability in data, analytics and technology.
- This has made ASIC more agile, strategic and effective.
On the enforcement front – we may not always win in court. And this is because we do not take cases that are just sure wins.
- Nevertheless, the overwhelming preponderance of matters we take to court find favour with the judges who hear them.
- This has resulted in significant pecuniary penalties, strong deterrence signals, billions of dollars of remediation and the prevention of future harms.
ASIC is an agency that is even more than ever catalysing deterrence and correcting wrongs in the financial system.
We have also worked diligently to deal with referrals and case studies from the Financial Services Royal Commission and will soon have initiated proceedings, or resolved, all of them.
On regulatory best practice - we have innovated or been fast followers with our work in supervision and regtech.
We have also been quick to take advantage of new tools given to us by Parliament, such as the product intervention power. And we are well prepared for the new design and distribution obligations that come into effect later this year.
We are also intently focused on delivering as the conduct regulator for superannuation.
As mentioned before, in challenging and critical times, the pandemic saw ASIC in its best light.
- We quickly pivoted to take action or forbear in ways that supported businesses and consumers.
- Our primary focus was on market stability and reducing the risk of harm to consumers through scams, misleading advice and unlicensed conduct.
We facilitated the raising of much needed capital, acted to stabilise a volatile market, and took practical steps to assist companies conduct meetings which could not be conducted in person.
Over the past year, we also provided guidance to insurers through the bushfires and now the floods. We also provided guidance during the pandemic to banks, superannuation trustees and insolvency practitioners.
And, very notably, our MoneySmart website is used by as many as 10 million Australians to help them plan their finances or obtain advice on key financial topics.
During recent years, we can also point to a significant improvement in cooperation with other domestic and international regulators and agencies, especially with APRA.
- We have actively participated in the Council of Financial Regulators that has served as an extremely effective forum for coordination during the pandemic.
- We are also working as closely as we ever have with AUSTRAC and are contributing to the initiatives lead by the Department of Home Affairs in relation to cyber security.
While it would be fair to say that our internal governance changes made over the last two years have taken time to bed down, they are now working well.
We have added to them in recent months with further process and procedure improvements following the lessons learned from the reports of the ANAO and the Thom Review.
As I have noted in previous Parliamentary Committee hearings, my fellow Commissioners put in place many of the changes ultimately recommended by Dr Thom before her report was provided to us.
We have also recently implemented a head of office function and, importantly, a new risk management framework.
Of course, there have been criticisms of us, some warranted, some less so. I can assure you we are attuned to all them.
- For example, our enforcement team has a rigorous “lessons learned” program that examines matters that did not go as we had hoped in order to examine what we can improve on.
- Another example is the SMSF red flag pilot we conducted in 2018 that has been subject of review by this Committee. We acknowledge that disclosing only the average cost of running a SMSF in the fact sheet that was distributed as part of the pilot was not sufficient, even though, at that stage, this was the only cost figure available to us. We regret failing to seek a median cost figure before distributing the fact sheet.
Finally, Chair I would like to thank the Committee for its important oversight role. We always pay close attention to your reports on our activities, including the most recent one published last December. I am pleased to say that report was largely positive, but I also assure you that we hear all the commentary that it contained.
Let me close by saying that ASIC continues to be resolutely committed to maintaining a fair, strong and efficient financial system for all Australians.
My colleagues and I would be happy to take your questions.