Should ASIC be split to ensure better corporate regulation?
Sep 19, 2024
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In this discussion, Andy Schmulow, an Associate Professor of Law, and Dr. Jason Harris, a Professor of Corporate Law, dive into the critical failures of the Australian Securities and Investments Commission (ASIC). They advocate for splitting ASIC into specialized regulators to enhance corporate oversight and protect consumers. Highlighting ASIC's inefficiency in addressing corporate crime, they stress the urgency for reform to safeguard retirees’ finances. The conversation also touches on the need for a greater emphasis on valuing natural ecosystems within economic frameworks.
The proposal to split ASIC into two specialized regulatory bodies aims to enhance its effectiveness in enforcing corporate compliance and protecting consumers.
A new initiative to quantify the economic value of ecosystems aims to improve understanding of their contributions to society and support informed environmental management.
Deep dives
Regulatory Deficiencies in ASIC
The Australian Securities and Investments Commission (ASIC) has faced significant criticism for its regulatory effectiveness, particularly in light of its overly broad mandate which hampers its ability to focus on financial misconduct. Experts argue that ASIC's role as a catch-all regulator has led to inadequate enforcement and oversight, particularly in the wake of findings from various inquiries, including the recent Bragg report. Despite the gravity of issues such as 'fees for no service' amounting to nearly a billion dollars annually, ASIC’s response has been lackluster, often merely indicating they will 'consider' action against culpable entities. The call for restructuring ASIC into dedicated regulatory bodies for financial conduct and insolvency is emphasized as essential for improving its effectiveness and accountability in protecting consumers and ensuring corporate compliance.
Systemic Challenges in ASIC’s Enforcement Approach
The enforcement capabilities of ASIC have been questioned, revealing a systemic issue where a mere 0.3% of complaints lead to prosecution, indicating that the vast majority of wrongdoing goes unchecked. Experts express frustration over ASIC's lengthy investigative processes that can take years, ultimately leading to outdated cases that lack relevance by the time they reach court. In addition, it is noted that ASIC tends to prioritize low-level cases while neglecting larger, more complex corporate misconduct, which fosters a perception that the regulator is incapable of addressing significant financial crimes. This reluctance to tackle substantial offenders, particularly among larger corporations, raises concerns that Australia could be evolving into a haven for white-collar crime, as serious threats remain largely unaddressed.
Valuing Australia's Ecosystems
An initiative is underway to quantify the economic value of Australia’s ecosystems through a standardised framework aimed at understanding their contributions to society. This approach will assess both the direct benefits, such as fisheries and water filtration, as well as indirect services that ecosystems provide, contributing to overall economic stability and sustainability. The goal is to establish a national baseline that allows for continuous monitoring of ecosystem health and economic impact over time, making it clear that preserving natural environments is crucial for various industries, including tourism and agriculture. Although this project is in its initial stages, it aims to refine methodologies and expand the range of ecosystem services measured, ultimately leading to more informed decision-making regarding environmental resource management.
The recent Senate Economics Reference Committee chaired by Andrew Bragg, delivered an extremely critical report on the performance of the corporate regulator, ASIC. It was recommended that the Australian Securities and Investments Commission be split into two bodies to address a perceived lack of competence.
Guests:
Andy Schmulow, Associate Professor in the School of Law at the University of Wollongong
Dr Jason Harris, Professor of Corporate Law, Interim Deputy Dean and Interim Deputy Head of School at the University of Sydney Law School
What's our environment worth? In 2025, the ABS will release its first set of national data to measure the value of our ecosystems, across terrestrial, freshwater and marine realms.
Guest:
Penny Johnson, Head of the Centre of Environmental Accounts at the Australian Bureau of Statistics
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