It’s not ASIC’s job to eliminate risk: Longo

According to the chair of the corporate regulator, risk-taking and encouraging innovation are an “essential part of Australia’s financial system and economy”.

“ASIC is [not] here to eliminate risk,” Joe Longo said at the AFR Super and Wealth Summit on Monday (22 November).

“But where industry has neglected to take its share of responsibility, ASIC will not hesitate to deploy the powers in our regulatory toolkit – to deter misconduct that causes harm, hold to account individuals and corporations that treat their responsibilities as optional, and drive a culture of better corporate behaviour.”

He explained that the corporate regulator needs to balance two key aims – supporting legitimate business activity while enabling an independent discharge of its own key regulatory and enforcement responsibilities.

“These outcomes are not mutually exclusive. By enforcing the law against those who break the rules, we support those who want to do the right thing,” Mr Longo continued.

“We now have a range of recently legislated powers available to augment our regulatory toolkit. These include new and increased civil and criminal penalties for misconduct and powers of intervention to prevent unsafe financial products being distributed.

“This means we can take considered and proportionate action where we find harm or wrongdoing.”

Super members deserve better

Speaking specifically about the super industry, Mr Longo acknowledged the increasing participation of trustees in the market, with many large superannuation funds moving investment management functions in-house.

As trustees insource more in terms of market participation, Mr Longo said, they need to ensure they have robust risk management, compliance and governance arrangements specifically focused on their obligations as market participants.

“ASIC recently examined switching of investment settings by directors and senior executives, highlighting widespread poor conflict-management arrangements. This is very concerning, given the level of sophistication and governance required of trustees when managing billions of dollars in assets on behalf of fund members,” Mr Longo said.

“They deserve better.

“Superannuation members need to be confident that those entrusted to act on their behalf do. And that confidence is justified.”