The Senate Economics References Committee Report on the Performance of the Australian Securities and Investments Commission reviews ASIC’s performance through 2 case studies: CBA’s financial planning activity and ASIC’s role in the regulation of consumer credit.
Whilst most of the publicity relating to the report has focused on financial planners and advisers, the Report makes 61 wide-ranging recommendations, many of which relate to ASIC administration of consumer credit protection.
Consumer credit related recommendations include:
- that ASIC develop a multi-pronged campaign to educate retail customers about the care they need to take when entering into a financial transaction and where they can find affordable and independent advice or assistance when they find themselves in difficulties because of that transaction.
- that ASIC actively encourage consumers to report any suspected unscrupulous conduct related to consumer credit.
- that as the national credit reforms introduced in 2010 bed down, ASIC should:
* carefully monitor the implementation of the new laws giving particular attention to activities that may fall outside the legislation but which pose risks to consumer interests;
* ensure that it acts quickly to alert consumers to likely dangers and the government to any problems that need to be addressed; and
* build capacity to monitor and research lending practices and to be prepared to launch marketing and education strategies should poor practices begin to creep back into the industry. - that ASIC devote a section of its annual report to the work of the financial services and consumer credit external dispute resolution (EDR) schemes, accompanied by ASIC’s assessment of the systemic and significant issues the EDR schemes have raised in their reports to ASIC.
- that the Financial Ombudsman Service and the Credit Ombudsman Service set key performance indicators (KPIs) for meeting milestones in their management of a complaint, publish these milestones and KPIs on their website and report their performance against these KPIs in their annual reports
- that ASIC, in consultation with the Financial Ombudsman Service (FOS) and the Credit Ombudsman Service (COSL):
* consider amending the terms of reference for FOS and COSL so that the caps on the maximum value of a claim that the EDR schemes may consider and the maximum amount that can be awarded are increased and indexed to the consumer price index;
* examine the processes for reporting to ASIC matters of significance and emerging systemic issues with a view to improving the reporting regime;
* establish protocols for managing allegations of less serious fraud to ensure that such complaints do not get lost in the system and are recorded properly on ASIC’s databases;
* improve the guidance provided to complainants so they fully understand that FOS and COSL are dispute resolution bodies and that complainants must prepare their own cases; and
* consider establishing special divisions in FOS and COSL to deal with small business complaints.
There has been speculation whether ASIC’s consumer protection functions may be moved out of ASIC to the ACCC. Further details of a possible shift are likely to become clear with the release of the report of the Financial System Inquiry’s Interim Report on 15 July.
Related links
ASIC statement on Senate Economics Committee report
