Conduct regulator has seen organisations trying to get by with just the bare minimum of compliance which has not always been in line with fairness to their consumers.
Speaking at the Australian Securities and Investment Commission (ASIC) update in Melbourne, Deputy Commissioner Peter Kell said that the Australian community expects the financial institutions to provide products to have value and ultimately a ‘good outcome’.
He called on organisations to ‘engage with how your organisation is meeting the challenges of this period of scrutiny, review, and reflection.’
The Royal Commission report is not expected until the end of the year, but that the investigations have raised the important question of ‘if the lid was lifted on your business, would the process of transparency and accountability be a positive one?’
At the update, Kell focussed on some the findings and implications of the royal commission, the reforms to ASIC’s regulatory toolkit and about the transparency of public data and how it will ‘raise the standards of accountability.’
He also addressed some of the reforms that have strengthened ASIC’s toolkit:
significantly stronger and clearer rules about the obligation of licensees to report breaches to ASIC honestly and in a timely manner.
a stronger ability for ASIC to take regulatory action against senior managers or controllers of financial services businesses.
a 'directions power', that will enable ASIC to direct licensees to take remedial actions such as consumer compensation programs.
stronger penalties for licensees. For example, a breach of section 912A, the 'efficiently, honestly and fairly' obligation for licensees currently does not incur a penalty, but would under proposed reforms.
Design and distribution obligation that will help when tackling the issues that surround fees for no service.
“These obligations will bring accountability to issuers and distributors of products by requiring them to establish processes and controls for ensuring products are designed with customer needs and understanding in mind and are marketed to the section of the population for whom they are useful and appropriate,” he explained.
This would also go hand in hand with product intervention powers, but the ‘scope’ of the power is still under question.
Kell also announced that the ASIC has been developing data analytics solutions that will help the regulator to ‘identify, analyse and respond to risks, and to achieve better consumer outcomes.’
Better and recurrent data form the financial services will help to:
better understand the markets we regulate
to more effectively detect and quantify existing and emerging risks
to identify sub-sectors for deeper supervisory focus, and
to drive better consumer outcomes in part by providing data publicly.
He did acknowledge that having the recurrent data from FIs will bring an extra cost and indicated that the regulator would work with industry to help to mitigate this impact.