Appearing before the Senate economics references committee on Wednesday (1 November), former chair of the Australian Securities and Investments Commission (ASIC) Anthony D’Aloisio AM defended the regulator’s enforcement framework.
He dismissed suggestions ASIC should broaden its regulatory scope to ensure it identifies and acts against a larger pool of entities engaging in misconduct.
Mr D’Aloisio, who served as ASIC chair from 2007 to 2011, said the regulator did not have enough resources to pursue all potential breaches of financial services obligations.
He added that when compared to its overseas counterparts – like the US Securities and Exchange Commission and the Financial Consumer Agency of Canada – ASIC is “doing far more” to enforce regulations.
“I looked at the SEC, I looked at the FSA, I had connections with the Canadian authorities and so on,” he said.
“That gave me a feeling that we probably had our priorities right and that we were concentrating on the things that mattered.”
Mr D’Aloisio went on to claim that he did not think an increase to government funding for ASIC’s enforcement regime would enhance the regulator’s effectiveness and may be counterintuitive.
“If government were to give ASIC unlimited resources or double its budget [it] could pursue a lot of other actions [but] I’m not sure if that would be wise [from] a public benefit point of view,” he said.
The former ASIC chair lauded the strength of the Australian financial services market, which he said was evidenced by the level of overseas investment in local institutions.
“Going back to my time, there was no question that we have markets of very high international reputation, and people want to come here to invest,” he said.
“So, we’re not a basket case in any sense. We’ve got a regulatory system that’s highly respected and supported through investment, which is the key.
“…But I totally accept there will be situations where retail investors, mums and dads, and even wholesale investors won’t be happy when something happens and do expect that ASIC takes action. In some cases, they’ll say that ASIC should have acted earlier.”
Mr D’Aloisio’s appearance before the Senate comes just weeks after ASIC released its latest annual report, in which sitting chair Joe Longo commended the regulator’s recent enforcement record.
“ASIC remains focused on maximising our regulatory impact by addressing areas of greatest harm,” he said.
“Our priorities reflect the key trends and emerging issues in our regulatory environment, including the growth in sustainable finance, Australia’s ageing population, emerging and disruptive digital technologies and associated risks, and product design and distribution.
“We have made considerable progress against these priorities throughout the year, and this work continues.”
In 2022–23, ASIC collected $1.84 billion for the Commonwealth in fees, charges, and supervisory cost recovery levies, which represents a 9 per cent increase from 2021–22.
The annual report also showed that for 2022–23, ASIC received $426 million in operating appropriation revenue from the Australian government, including $55 million for the Enforcement Special Account (ESA), representing a $4 million or 1 per cent increase compared with 2021–22.
ASIC also received about $32 million of own‑source revenue, which is down $36 million from the previous year, while also running at a deficit of $83.65 million for the financial year.
ASIC attributed this to an increase in employee costs, including higher separation and redundancy costs compared with 2021–22, and higher amortisation expenses related to software.