In a submission to the Senate Economics References Committee inquiry into the performance of ASIC, ICA chief executive Lee White said the “layering of more and more responsibilities on to ASIC” has brought with it the risk of being seen by external stakeholders as being “spread too thin”.
While ASIC has been steadily increasing its staff numbers, the extra staff are not necessarily matching the additional functions and responsibilities of the regulator, he said.
“Much like any public or private sector organisation, it simply isn’t feasible to continue to increase staffing numbers on an infinite basis,” said Mr White.
ASIC should be keeping a closer eye on the deployment of its resources in order to better match the risks present in the financial services industry, he said.
"There are many examples where ASIC initiates a specific regulatory program that targets particular areas of focus in the marketplace, but then continues to allocate resources to the same program even when many would argue the impact (or relevance) in the marketplace of the work that continues to be done has significantly diminished,” said Mr White.
As an example, Mr White pointed to ASIC's accounts surveillance program, which was “initially very successful in lifting the standard of financial reporting in Australia”.
“However, many stakeholders in the capital markets would question whether ASIC’s work continues to have a major impact on the quality of financial information in the marketplace, given that many of ASIC’s initial objectives have now been met,” he said.
In the current environment where “ASIC's resources are being stretched”, the regulator has significantly reduced its fieldwork and considerably more work is being conducted in ASIC's offices, added Mr White.
“This creates challenges for ASIC’s investigators to perform their work efficiently while at the same time making sure that they are able to conduct a full and thorough investigation of the relevant issues,” he said.
In its submission to the Senates Economics References Committee, the CPA said that “under its current leadership” ASIC has increasingly isolated itself from its key stakeholders.
CPA chief executive Alex Malley said ASIC is currently defined by a “combative, compliance-focused approach, which on its chairman’s own admission, places a premium on 'leveraging' media headlines over substantive outcomes”.
The corporate regulator is more concerned with creating a “perception of action” than tackling the risks facing capital markets and the corporate markets, he said.
In addition, ASIC has been revealed to have a “glass jaw” when the CPA has raised its concerns with the regulator in the past, said Mr Malley.
“[ASIC] is content with shifting blame rather than responding in a considered or constructive way, or in the spirit of cooperation, which previously defined the organisation's approach,” he said.
