A severely-reduced operating budget for the Australian Securities and Investments Commission will mean its surveillance of certain sectors – including consumer credit – will substantially reduce and in some cases stop altogether.
Nine top ASIC executives appeared before the Senate Estimates Committee yesterday to discuss the effect of federal budget cuts to its operating budget.
ASIC’s budget will be slashed by around $120 million over four years, with $44 million or around 12% cut from its operating budget in the 2014-15 financial year.
Average staffing levels must reduce by 209 to 1,573 workers, and ASIC is already conducting a voluntary redundancy campaign, ASIC chairman Greg Medcraft said.
However, the reduced budget will mean reduced surveillance of certain sectors, he said.
“Our proactive surveillance will substantially reduce across the sectors we regulate, and in some cases stop.”
Medcraft said “for obvious reasons” ASIC will not identify sectors where there will be no proactive surveillance from now on.
But he said there will be reduced proactive surveillance for the deposit-taking, credit and insurance consumer sector.
“We will rely more on the intelligence we get from misconduct reports and the complaints we receive. We will limit our risk-based approach to focus on those entities or activities that have the greatest market impact.
“Where we do find that someone has intentionally broken the law, we will continue to do the best we can to ensure that the consequences are severe.”
ASIC also apologised for its bungling of the Senate's inquiry into the conduct of Commonwealth Financial Planning, after the regulatory body provided inaccurate and incorrect evidence, including the amounts of compensation paid and the effectiveness of the compensation process.
Medcraft said there were two steps which were not consistently applied, despite promising the inquiry they were previously.
These were that ASIC had had upfront communication with all clients whose files were subject to review, and victims had been offered up to $5,000 to get independent advice on any compensation offered.