Analysis by consumer advocacy group CHOICE has found that the Australian Securities and Investments Commission (ASIC) dramatically reduced its high intensity surveillance activities following funding cuts in last year’s Federal Budget.
The news comes as ASIC is set to appear before a Senate Estimates Committee today in Canberra.
“The effects of these cuts are deeply concerning given they followed a spate of massive financial industry failures that left thousands of consumers without their life savings,” says CHOICE Campaigns Manager Erin Turner.
“We rely on ASIC to monitor the likes of CBA, NAB, ANZ and Macquarie Bank and ensure consumers’ interests are protected. ASIC is doing a lot with very little. However, with $120 million being ripped from the regulator over four years it’s under gunned against some of the world’s most powerful financial institutions.”
“This analysis shows that cuts to ASIC’s budget have taken a big toll, with a dramatic decrease in the number of key surveillance, enforcement and investigation activities over the last year.”
CHOICE found a 74% decrease in the number of high-intensity surveillance activities, where ASIC auditors enter the operations of some of the most powerful financial institutions in Australia such as investment banks and superannuation entities to review their practices.
In the last financial year, CHOICE found that ASIC conducted 751 fewer surveillance activities since the cuts took effect.
“Given some of our largest financial institutions have a track record of not complying with law or regulation, such a significant decline in activity does not bode well. Crippling the financial regulator through major funding cuts will only serve to put more consumers in jeopardy,” Ms Turner says.
The CHOICE analysis also found a 135% decrease in the number of actions against potentially misleading or deceptive promotional material.
“If the Federal Government is serious about creating an environment where Australians can work, save and invest, they need to put their money where their mouth is and make sure our financial regulator gives consumers confidence in the sector,” says Ms Turner.
“When banks, financial advisers or brokers don’t do the right thing, the results can be devastating. This is why CHOICE is calling for, at minimum, the next Federal Budget to restore ASIC’s funding to pre-2013 levels.”
The CHOICE analysis comes as the Federal Government continues to weigh up the introduction of an industry-pays funding model for ASIC. CHOICE has again raised concerns with the industry-pays funding model for ASIC as the initial proposed model would not lead to secure, increased and non-conflicted funding for the regulator.
