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BFCSA: ASIC YES WE HAVE CONFLICT WITH BANKS re disclosure...Wallis warnings on conflict ignored.

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At loooooong last the bleeding obvious..........................................a glimmer of truth but no forgiveness from victims of ASIC's conflicted fuzzy thinking.

ASIC admits conflict of interest shortcomings

Written by James MitchellMonday, 12 May 2014


While he admits this is “not a nuanced version” of ASIC’s duties, Mr Kell said it does “capture our approach.”

ASIC deputy chair Peter Kell has spoken candidly about the corporate regulator’s focus on disclosure, inability to weed out conflicts of interest and the impact on advisers.

Speaking at the Centre for International Finance and Regulation conference in Sydney last week, Mr Kell said ASIC’s approach over the past 15 years has been “anything goes as long as you disclose”.

“The role of disclosure is an underlying principle in structuring your regulatory requirements and regimes,” Mr Kell said.

“That was central to the Wallis Inquiry regulatory philosophy and is central to ASIC’s powers,” he said.

“The approach we have had over the last 15 years has been ‘anything goes as long as you disclose’, that you can issue any sort of product out there - which has certainly enabled a wide range of choice - as long as you disclose, and you can have any sort of remuneration structure with conflicts of interest imbedded in it, as long as you disclose.”

“One of the lessons we have had since then is that approach puts too much weight on disclosure to address market problems,” he said.

“We have had a situation where too often disclosure has been the answer but we have forgotten the question.”

Disclosure remains central to the regulatory philosophy that underpins ASIC’s powers, Mr Kell said; however, the regulator is increasingly looking at areas where disclosure does not address market issues, he added

“We are looking into areas where disclosure is not addressing the market failure, not improving market outcomes, but all it is doing is imposing costs on those that have to produce the disclosure documents,” he said.

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  • doyla66
    doyla66 Tuesday, 13 May 2014

    “We have had a situation where too often disclosure has been the answer but we have forgotten the question.”
    It's a giant step in the right direction for ASIC. Yes, the bleeding obvious. What comes next?
    This really applies to investors first and foremost, as the chief interest of both ASIC and Government.
    How many years will it take ASIC to understand what Greg Medcraft said in 2011 - problems with investment and problems with borrowing are the two sides of the same coin. That's what securitisation is really about.
    But securitisation set out to provide risk free lending for the benefit of lenders. It assumed that there would always be a steady supply of borrowers willing to access easy credit. But if borrowers are unhappy in sufficient numbers and that market becomes seriously disaffected, the investment market associated with lending (e.g. RMBS, CDOs) dwindles as well.
    The smart money should be on ensuring that the borrower market is well regulated and honest through much higher standards policed by the corporate regulator so that Banks and lenders do much more than just disclosure as their contribution to ethical conduct with their lending products on offer. There is a long way to go before this higher order of thinking penetrates the thick walls of the Bank boardrooms. With laxity in regulation it was inevitable that laxity in Bank and lender conduct would follow .... and it did and continues to do so.
    Our stories bear testimony to the case by case illegal and fraudulent conduct within an overall framework of financial deception and lender criminal conduct against 'defaulting' borrowers in an effort to cover it all up and regain control of the borrower.
    It has been the "anything goes show" so long as you're not caught for many years. If ASIC seriously want to build their credibility with the Australian public start with correcting the Bank misconduct on the borrower side and then look at the impact that has on the investor side. It won't mean the end of the Banking and investment world if borrowers are able to access reliable information and products that are actually policed for their compliance with Law. Without stability in borrowing the investment side is always going to be edgy, a higher risk than most mainstream or conservative investors are prepared to take.

  • doyla66
    doyla66 Wednesday, 14 May 2014

    As per usual, an abrogation of their duties.
    So the question becomes: what do they do then?

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