ASIC incapable of preventing Storm situation

Review of regulatory role underway

Darin Tyson-Chan

Tue 21 Apr 2009

Preventing the collapse of financial services organisations such as Storm Financial is not something ASIC is capable of doing or is responsible for, according to the chair of the parliamentary joint committee on corporations and financial services Bernie Ripoll.

"In the lead up to Storm Financial's very spectacular collapse it was audited and had been compliance checked by ASIC and got through with flying colours," Ripoll told delegates at the Institute of Actuaries of Australia 2009 Biennial Conference in Sydney yesterday.

"There was not necessarily anything wrong with the organisation as it stood on paper, or in its systems, or the checks and balances that go with determining whether or not the organisation was meeting its obligations under law," he said.

Questions such as how the products were sold and what the products did are issues that ASIC is not currently responsible for, Ripoll said.

In order to try to improve this situation, the parliamentary joint committee on corporations and financial services is currently reviewing the role and responsibilities of ASIC.

Scrutiny of the regulation process is a natural result of collapses of major financial entities and the committee will be taking a close look at a whole range of factors, Ripoll said.

Areas that will be scrutinised are whether or not the regulations and legislation in place are adequate and whether or not they need to be enforced in different ways.

The review will also take into account the consequences of decisions made by individuals and whether or not consumers themselves are taking appropriate responsibility for their actions.

"The overall goal of the enquiry is to draw out common factors and try to better understand what led those organisations [like Storm] into failure," Ripoll said.