Bernie Ripoll (Oxley, Australian Labor Party) Share this | Hansard source

On behalf of the Parliamentary Joint Committee on Corporations and Financial Services I present the committee's report entitled Statutory oversight of the Australian Securities and Investments Commission, together with the evidence received by the committee.

I am pleased to speak to the committee's May 2011 report, Statutory oversight of the Australian Securities and Investments Commission. Section 243 of the ASIC Act directs the committee to inquire into and report on ASIC's activities and matters relating to those activities to which the parliament's attention should be directed. In preparing the report the committee held hearings with ASIC officials, the Office of Legal Services Coordination and the Australian Stock Exchange. I thank ASIC for its continuing cooperation and assistance and thank the representatives from the Office of Legal Services Coordination and the ASX for the additional insight they provided.

Responsibility for supervision of real-time trading on Australia's domestic licensed markets transferred from the ASX to ASIC on 1 August 2010. This means that the ASX has responsibility for market operation while ASIC has responsibility for market integrity. A key driver of the transfer was to promote efficiency through merging responsibilities for problem identification and investigation. The committee is pleased to note that since the transfer the time taken from identification of a trading problem through to formal investigation has decreased.

The committee endorses the protocols that the ASX and ASIC already have in place to coordinate their enforcement and monitoring activities and welcomes the further development of a protocol to govern continuous disclosure of information between the two bodies. The committee is particularly concerned to ensure that the transfer of responsibilities from the ASX to ASIC leads to measurable improvements in market integrity. We will continue to raise these matters with ASIC as is necessary.

The government also recently granted Chi-X an Australia market licence. On 29 April ASIC released the final market integrity rules that will provide the framework of competition in equity exchange markets. ASIC has also introduced market integrity rules specifically for the Chi-X market, which reflect the rules applying to the ASX. The committee endorses the work of ASIC in consulting closely with the Treasury, with the Australian Competition and Consumer Commission and with industry in developing access arrangements to market operator services. It is expected that Chi-X will commence operation in October or November of this year.

The committee also has had a continued interest in the complaints-handling mechanisms and complaints-handling methods of the regulator. As such, the committee notes with approval ASIC's commitment to continuously improving its complaints-handling process and acknowledges the large number and often sensitive nature of these complaints, which makes dealing with them quite complex. It is worth bearing in mind the scale of ASIC's complaints handling. ASIC receives approximately 14,000 complaints per year. Of these, approximately 21 per cent relate to matters outside of ASIC's responsibilities. For complaints within ASIC's regulatory ambit, policies regarding market integrity, confidentiality and privacy influence the type of response and the level of information the complainant receives.

ASIC's complaints-handling policy requires that it responds to 70 per cent of complaints within 28 days. The committee notes with approval that, for the year to date, 80 per cent of complaints were responded to in that time frame. Responding to complaints promotes market confidence and is a key regulatory function. The manner in which complaints are handled affects public opinion about whether ASIC is effectively fulfilling its regulatory responsibilities. It is apparent from evidence provided to the committee that complaints are thoroughly assessed. The committee expects ASIC to provide complainants with sufficient information and assure them that their complaints have been assessed without compromising the rights of a person investigated or market integrity.

With that said, it still needs to be noted that there still exists or appears to exist a gap between the market's expectations, expectations of consumers within that market and the work of the regulator—the good work that ASIC does. I think it is a role and responsibility of this committee to actually try to bridge that gap, be it a perception gap or a reality gap. I believe, as I know the rest of the committee does, that continual improvement needs to be exercised in this particular area to ensure that there is market confidence and to ensure that the public has the right view of the capacity of the regulator to fulfil its responsibilities.

The committee will hold its next hearing with ASIC next month and looks forward to the opportunity to discuss these and other issues with the new Chairman of ASIC, Mr Greg Medcraft. I take this opportunity to congratulate him on the fine work he did as a commissioner and now in his new role as Chairman of ASIC. I also take this opportunity to thank outgoing chairman, Mr Tony D'Aloisio, for the work he has done and the assistance he has given the committee in recent years. Mr D'Aloisio has made a significant contribution to the Australian community as a whole and to the regulation of the Australian securities market in particular. I also thank the secretariat for, as always, its good work and to thank the committee members for their fine efforts as well.

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