ASIC split proposed
A Senate committee has proposed splitting the Australian Securities and Investments Commission (ASIC) into two new regulators.
Recommendations have been made following a 20-month inquiry by the Senate Economics Committee into ASIC's operations and effectiveness.
The committee’s final report identifies a “bad culture” and a sprawling bureaucracy at ASIC, which it claimed hindered the commission's ability to prosecute white-collar crime effectively.
The report criticised ASIC for its focus on internal issues rather than fulfilling its regulatory duties.
It says that ASIC often failed to prosecute offenders and, when it did, the penalties imposed were inconsistent with the severity of the offences.
“While ASIC tries to deflect criticism that it is a weak corporate regulator by promoting its recent enforcement actions, the reality remains that corporate law is under-enforced in Australia,” the report says.
The report recommended that ASIC adopt an enforcement approach prioritising litigation for all serious breaches of corporate law.
It also suggested establishing a public register of civil and criminal outcomes and amending whistleblower protection provisions to offer financial incentives for disclosing corporate misconduct.
The committee recommended splitting ASIC into two separate regulators: a corporations regulator and a financial conduct regulator.
This restructuring aims to address the issues arising from ASIC's broad remit, which currently covers around 95,000 entities with a workforce of approximately 2,000 staff.
The report attributed the inefficiency in Australia's corporate regulation to the extensive and diverse responsibilities assigned to ASIC since its inception in 1991.
Despite the comprehensive recommendations, Senators say it is unlikely that changes will be adopted within the current term of government.
ASIC says it will “take time to consider” the report's findings.
The report emphasised the importance of protecting whistleblowers and encouraging their role in exposing corporate misconduct.
It recommended financial incentives and compensation mechanisms for whistleblowers who suffer personal detriment, such as loss of career prospects, due to their disclosures.
The committee also suggested reforms to ASIC's governance, proposing a streamlined management structure with a CEO instead of a full commission.
It recommended enhancing transparency through a public register of investigations, prosecutions, and outcomes to bolster public trust and accountability.