The Australian Securities and Investments Commission (ASIC) is set to be subject to structural reform following a parliamentary inquiry led by Liberal senator Andrew Bragg.
"Haven for white-collar crime"
This inquiry revealed severe cultural and operational deficiencies within the corporate regulator, and depicted Australia as a "haven for white-collar crime”.
Initiated in October 2022, the inquiry set out to scrutinise ASIC’s effectiveness in enforcing corporate law.
Over 20 months, it revealed that ASIC's cultural problems, slow response to tip-offs and limited investigations referred to the Commonwealth Director of Public Prosecutions (CDPP) were a source of grave concern.
This in turn prompted calls for urgent reforms to enhance law enforcement, complaints handling and overall organisational culture.
Senator Bragg has been vocal about ASIC’s shortcomings, noting in February that there are too few criminal convictions for corporate law breaches.
His criticism echoes a 2014 statement by then-ASIC chair Greg Medcraft, who highlighted similar issues, which the Abbott Coalition government dismissed at the time.
Ever-decreasing referrals
Recent figures point to a worrying trend. ASIC made only 35 referrals to the CDPP in the year to June 2023, and just 12 referrals in the year to May 2024, with four in the past six months.
This is a stark contrast to the 86 referrals made in 2019, raising questions about ASIC’s commitment to its law enforcement duties.
Throughout the inquiry, ASIC has faced intense scrutiny, responding to numerous questions and preparing for multiple committee meetings.
Notable cases discussed include ASIC’s handling of Nuix, a disastrous share market float, and the collapse of Dixon Advisory.
Despite these challenges, ASIC chair Joe Longo said the regulator was performing adequately, citing “great aspects” of its culture.
This is despite a 2023 survey that highlighted issues with motivation, satisfaction, role clarity and customer service focus within the organisation.
The inquiry’s final report is expected to be controversial, particularly within the Liberal Party, where opinions on ASIC’s performance are divided.
The report is expected to propose reforms to clarify ASIC’s roles and responsibilities, improve law enforcement and complaints handling, and better protect and incentivise whistleblowers.
Such recommendations would address long-standing issues, such as ASIC’s inadequate handling of whistleblower reports including the Commonwealth Bank financial planning scandal and the aforementioned Nuix whistleblower fiasco.
Finances also under review
ASIC’s financial arrangement, where revenue from penalties goes directly to the Commonwealth, is also under scrutiny.
In 2023, ASIC raised A$1.8 billion from penalties and fees, yet received a budget of less than A$500 million.
While the budget was increased in May by A$236 million over four years, most of these funds are allocated to one-off projects, leaving ASIC with insufficient resources to fulfil its expanding remit.