What good looks like


A speech by John Price, Commissioner, Australian Securities and Investments Commission at the Governance Institute of Australia – Essential Legal and Regulatory Update (Sydney, Australia), 6 April 2017

Thank you for inviting me to speak at today’s legal and regulatory update.

A key theme that I think is a very important trend (for regulators and practitioners alike) to consider is growing consumer and investor expectations of the people working in markets and in the financial services sector.

I can’t put it much better than David Murray did in his recent Financial System Inquiry report, which said:

To build confidence and trust in the financial system, firms need to take steps to create a culture that focuses on consumer interests… The [regulatory] framework needs to more effectively align the governance and corporate culture of financial firms, employees and other representatives.

Note: See Financial System Inquiry final report, p. 195 and p. 193.

With that in mind I wanted to do something a bit different in my speech today. Rather than focus on section numbers, regulatory documents and past sins, I want to focus on where ASIC thinks particular sectors are now, what good looks like in some key areas we regulate and how we want to try to move more of the people we regulate toward that aspiration.

Make no mistake, I think this work should have a broader interest to firms beyond a basic interest in compliance. The reason is simple – a misalignment between what investors and consumers expect and what they get is potentially very expensive indeed. Consider these figures from the United Kingdom: a 2016 Financial Reporting Council (UK) report found that intangible assets (such as intellectual property, customer base and brand) now account for over 80% of total corporate value, compared to under 20% 40 years ago. Think now about potential value destruction if customers and investors believe they are not getting what they bargained for and ‘vote with their feet’.

Media enquiries: Contact ASIC Media Unit