Labor Senator Sam Dastyari used his position on the Senate Economics Legislation Committee to pose a series of questions to senior ASIC representatives in Canberra yesterday.
He tabled a note published by the regulator on 20 December 2013 titled ASIC Update on FOFA, drawing attention to the section that states: “ASIC will not take enforcement action in relation to the specific FOFA provisions that the government is planning to repeal”.
ASIC deputy chair Peter Kell said the approach taken in the December 2013 note was consistent with the regulator's previous indications that it will be taking a 'facilitative approach' to FOFA compliance for the first 12 months of the regime (which came into effect on 1 July 2013).
“If there are deliberate and egregious breaches then we will take enforcement action,” said Mr Kell.
“So it’s a measured approach. That’s also consistent with the approach we’ve taken to a range of other regulatory reform implementations including, for example, the credit reform,” he said.
But Mr Dastyari said the commitments by ASIC on 20 December 2013 differed markedly from the regulator's proposed 'facilitative approach' to FOFA first mentioned in a note on 25 January 2013.
There is a difference between a facilitative approach to existing legislation, on the one hand, and a commitment not to enforce sections of the same legislation before amendments are introduced to parliament on the other, he said.
“FOFA is the law as it currently stands. What shocks me is that you are making decisions about what you do and don’t enforce,” said the senator.
“The difference here is there is no bill that been passed that will change the law, is there?” he asked the ASIC panel.
In response, Mr Kell said that was the very reason ASIC is “taking a very careful approach”.
“There’s no value for the way this industry works – no value for our regulatory approach – in going out and initiating enforcement action in relation to matters that are currently being considered before the parliament,” said Mr Kell.
Mr Dastyari said ASIC had given advice providers a “green light” to breach the FOFA provisions based merely on an indication by the government that it “intended” to repeal sections of the reforms.
“Frankly, to me this is a green light to be able to do what I want and completely ignore the FOFA changes,” he said
Assistant Treasurer Arthur Sinodinos came to ASIC's defence in a terse exchange with Mr Dastyari.
“You are seeking to become a whirling dervish on this issue at a time when all ASIC is trying to do is provide some certainty to people in the marketplace,” he said.
Mr Sinodinos told Mr Dastyari he would be free to oppose the amendments when they were introduced into parliament – to which the Labor senator replied thta he would indeed be voting against them.
