ASIC: still slow, timid, uncertain
Don’t be fooled by ASIC’s new approach.
ASIC remains fundamentally a slow, timid and belatedly reactive regulator. It has sharpened its rhetoric and actions around pointy end enforcement, but change is proving more elusive across its core regulatory mandate.
Case in point – advice on the Early Access to Super Scheme.
The government announced the scheme on 22 March 2020. It had a start date of 20 April 2020. You didn’t need a PhD in financial services law to immediately recognise that people considering accessing the scheme need financial advice. And that advice needed to be affordable and accessible. If you need to raid your super, you are hard up for disposable cash.
Nor did you need a PhD to recognise that there would be a concentration of people considering the scheme among certain groups, with related common characteristics and financial issues. Hospitality and retail workers. Young people, with limited savings. Renters unable to pay rent (one of the obvious potential implications was that younger renters in those industries may access super to fund living expenses including rent in the hope of a bounce-back around July or August and their job coming back to life).
And yet…radio silence from ASIC.
Then on 3 April 2020, in response to complaints it had received that real estate agents were encouraging renters to access their super under the scheme (in response to requests for rent relief from landlords), ASIC moved, issuing a blunt warning to real estate agents not to provide unlicensed financial advice. Justified? Yes. Reactive? Undeniably.
What else did ASIC do?
Nothing, until its belated announcement [on 14 April 2020] of temporary changes to advice laws to facilitate fast, fixed price, low-doc advice subject to strict conditions on early super access (see our article detailing the changes, and regarding the need for those changes here www.mackayla.com.au).
Why did it take so long?
We’ve got no idea.
The changes were obvious and limited. No legislation was needed – ASIC had the power to grant the relief on 23 March 2020. And yet there was nothing from the chief regulator for weeks.
Why wasn’t ASIC ahead of this issue in March, not the week before the scheme opened?
ASIC’s changes to Enforcement have been swift and significant. A new head, a new mantra, and evidence of a significant change in approach to investigations and certain enforcement actions.
But Enforcement is only one part of ASIC’s remit. It’s a necessarily reactive, ‘end-point’ part of it – when Enforcement steps in, the damage has been or is being done. In my opinion, many of the issues for which ASIC’s enforcement in financial services was pilloried at the Hayne Royal Commission, to at least some extent, originated directly or indirectly from failings in its general regulation, supervision and policy. Timid, cautious, uncertain, reactive regulation at the policy point.
So, how does the regulator better understand the market, its products and trends to make better proactive decisions? How do you empower it to anticipate, respond quickly and be decisive?
These are not simple questions. I don’t know the answers, but it’s also not my job to work them out.
Over to ASIC.
