An address by Jillian Segal, Deputy Chair, ASIC, to the National Institute for Governance Twilight Seminar, Canberra, 8 November 2001.
Introduction
Thank you for inviting me to join you today.
There is no doubt that the recent collapses of HIH, One.Tel, Harris Scarfe, and of course more recently Ansett, have refocussed the community's attention on issues of corporate governance, self-regulation and the role of the regulator.
Following the Wallis report in 1997, we have seen many changes to the Australian regulatory landscape. These not only include the establishment of ASIC and APRA, but the many changes to the Corporations Law (now known as the Corporations Act). In some cases, particularly in the area of fundraising, the shift has been away from prescription to relying on disclosure. In other areas, such as the Managed Investments regime, an emphasis has been placed on compliance systems. In one sense, these changes represent shifts to greater selfregulation within a framework oversighted by the regulator.
However, self-regulation is not without its difficulties. The widespread problems in the mortgage investment industry around Australia, which ASIC is currently investigating, can be seen as an example of an industry where self-regulation through Law Societies and finance broking organisations did not produce a satisfactory outcome for investors.
You are all no doubt aware that, in August 1999, the Minister for Financial Services & Regulation, the Honourable Joe Hockey, established a Taskforce on Industry Self-Regulation in Consumer Markets, to inquire into and advise on aspects of self-regulation in Australia. The Taskforce was chaired by Professor Berna Collier, whom I am very pleased to say joined us on the 5th of November this year as a full-time member of ASIC.
The Taskforce reported to the Government in August 2000 following two rounds of consultation with business and consumer representatives around Australia, outlining the nature and extent of self-regulation in Australia. It set out good practice principles for self-regulatory schemes, many of which will be reflected in the features or conditions for successful self-regulation, which I will discuss a little later.
Today, I will cover ASIC's views on self-regulation in the financial services industry, and how we see our role as the corporate regulator in the present climate of corporate collapses and law reform. In discussing these issues, I will touch on some of our recent experiences, particularly in relation to FSR and the role of external dispute resolution schemes, corporate governance, disclosure, and the role of auditors – issues that are highly topical at the present time. I believe these issues are likely to become even more topical in the context of discussions about self-regulation into the future.