Regulator has failed, two-year inquiry finds
The Senate economics committee has issued a set of recommendations for a new corporate and financial regulatory structure in Australia, following a two-year inquiry into the Australian Securities and Investments Commission (ASIC).
In its final report on ASIC’s investigation and enforcement capabilities, the committee recommended splitting ASIC into two separate bodies: one focused on companies and the other on financial services enforcement. During the inquiry, ASIC admitted that its “very wide remit” affected its regulatory approach.
“Separating this broad remit into two individual bodies will provide a more coherent and consistent approach to corporate regulation and law enforcement,” said Senator Andrew Bragg (pictured above), who chaired the Senate standing committee on economics.
The committee also proposed measures to improve governance and transparency, including a statutory mandate to investigate corporate misconduct and to report on these investigations publicly. They suggested reworking the new regulators’ “statement of expectations” to enhance transparency and parliamentary oversight.
“We established this inquiry in October 2022 because it was clear ASIC was failing to fulfil its sole mandate to enforce Australia’s corporate laws,” Bragg said in a statement. “Countless Australians have been hurt by ASIC’s consistent failure to investigate and deter corporate crime.
“Over the last 20 months, the committee has uncovered the dire state of ASIC: an organisation without transparency, few prosecutions, and a litany of cultural, structural and governance issues. It is clear ASIC has failed.”
The report also highlighted ASIC’s failure to enforce the law and secure prosecutions, citing cases such as Nuix and Dixon Advisory as examples of continued corporate misconduct facilitated by ASIC’s shortcomings.
The committee also acknowledged the pressure of ASIC levies on small businesses and recommended adjusting the funding model to alleviate this burden.
“We need regulators to be responsive and transparent, but most of all to be focused on enforcement,” Bragg said. “These measures, if adopted, would provide Australians with the protection and confidence which is sadly absent.”
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