20 April 2016
Media Release - #2016042, 2016

Turnbull Government bolsters ASIC to protect Australian consumers

Joint media release with
the Hon. Kelly O'Dwyer MP
Minister for Small Business
Assistant Treasurer

The Turnbull Government today announced a $127.2 million reform package to better protect Australian consumers by strengthening the Australian Securities and Investments Commission (ASIC).

The broad reform measures will equip ASIC with stronger powers and funding to enhance surveillance capabilities better enabling our corporate watchdog to combat misconduct in Australia’s financial services industry and bolster consumer confidence in the sector.

The reform measures comprise the Turnbull Government’s response to the ASIC Capability Review, commissioned in July 2015.

The five recommendations to government will be immediately implemented. These focus on governance, recruitment, annual performance discussions with the Minister and most importantly, removing ASIC from the Public Service Act.  This last measure will support ASIC to more effectively recruit and retain staff in positions requiring specialist skills and also implements a finding of the Financial System Inquiry (FSI).

The Government will invest $61.1 million to enhance ASIC’s data analytics and surveillance capabilities as well as modernise ASIC’s data management systems. An additional $9.2 million will also be made available to ASIC and Treasury to ensure they can implement appropriate law and regulatory reform.

The Government is also providing ASIC with $57 million to enable increased surveillance and enforcement on an ongoing basis in the areas of financial advice, responsible lending, life insurance and breach reporting.

As recommended by the FSI, the Government will introduce an industry funding, or ‘user-pays’ model for ASIC, to commence in the second half of 2017.

From 2017-18, ASIC’s costs will be recovered from all industry sectors regulated by ASIC.

Industry funding ensures that the costs of regulation are borne by those entities that have created the need for it, rather than the Australian public.

The Government recognises that continuity of ASIC’s leadership is necessary to provide support for the implementation of these important reforms and to bolster consumer confidence.

Therefore the Government intends recommending to the Governor-General that Mr Greg Medcraft’s term as ASIC Chairperson is extended for a further 18 months.

To further support Mr Medcraft and the ASIC Commissioners in their important work, the Government also intends to appoint an additional ASIC Commissioner.

This new Commissioner will have experience in the prosecution of crimes in the financial services industry.

The Turnbull Government recognises that our financial system touches the lives of every Australian family and business and that our banks have not always lived up to the standards we expect.

That’s why we are continuing to act to ensure our regulators are tough cops on the beat with the resources and powers they need to respond to misconduct and prosecute those who seek to take advantage of consumers.

This package builds on the Turnbull Government’s response to the FSI which set out a wide suite of policies to improve our financial system, including a specific set of measures to improve consumer outcomes.

Today’s package is the next step in the Turnbull Government’s plan to ensure improved outcomes for Australians,  and to support ASIC in its work to address misconduct in the financial sector.


Turnbull Government’s actions to boost consumer protection in financial services:

ASIC Capability Review

In July 2015, the Government established an expert Panel to review the capabilities of ASIC.

The Panel found that some of ASIC’s regulatory capabilities are in line with, or at the forefront of, global best practices and that in other areas ASIC’s approach is similar to the practice of peer regulators and appropriate for current and future needs.

The Government welcomes these conclusions however, it also acknowledges that additional measures are required to support ASIC in delivering on its mandate and ensuring it is fit for the future. The Panel found there were aspects of strategy, governance, IT, data infrastructure, management information systems and ASIC’s approach to stakeholder engagement that could be improved.

The Panel made 34 recommendations. The Government is progressing the five recommendations addressed to it and welcomes ASIC’s Implementation Plan to address the remaining 29 recommendations.

Enhanced data analysis

The Capability Review highlighted the critical role that sophisticated analytics and risk assessment processes can play in identifying and mitigating conduct risk. This is an area where regulators around the world have and continue to make significant investment.

In response to this recommendation, the Government has committed $61.1 million to enhance ASIC’s data analytics and surveillance capabilities as well as improving ASIC’s information management systems.

This will ensure that ASIC will have best practice analytical techniques to detect financial sector misconduct and equip ASIC with improved management information systems.

Surveillance funding boosted

The Government will also provide ASIC with $57 million for surveillance and enforcement on an ongoing basis.

This funding boost will enable ASIC to increase its surveillance and enforcement activities, particularly in the areas of financial advice, responsible lending, life insurance and breach reporting.

Coupled with better data collection, this funding will increase ASIC’s effectiveness in detecting and responding to misconduct and deliver better outcomes for consumers.

Industry Funding Model for ASIC – ‘user pays’

As recommended by the FSI, the Government will introduce an industry funding model for ASIC, to commence in the second half of 2017.

From 2017-18, ASIC’s costs will be recovered from all industry sectors regulated by ASIC.

Industry funding ensures that the costs of regulation are borne by those entities that have created the need for it, rather than the Australian public. 

Industry funding will establish price signals to drive economic efficiencies in the way resources are allocated within ASIC and improve ASIC’s transparency and accountability.

The Government will consult extensively with industry to refine and settle this funding model.

Accelerated law reform response to the Financial System Inquiry

The Government is determined to ensure that ASIC has the powers it needs to protect the Australian public as soon as possible. To ensure continued confidence in Australia’s financial system, the Government will commit an extra $9.2 million in funding for ASIC and the Treasury to accelerate implementation of the following measures recommended by the FSI:

  • a product intervention power to enable ASIC to respond to market problems in a flexible, timely, effective, and targeted way;
  • product distribution obligations for industry to foster a more customer-focussed culture;
  • a review of ASIC’s enforcement regime, including penalties, to ensure that it can effectively deter misconduct; and
  • the strengthening of consumer protections in the ePayments Code, which regulates consumer electronic payments and includes a number of consumer protections, to ensure that it keeps pace with emerging technologies. 

The Government is ensuring that ASIC will have the powers it needs to protect consumers and perform its function in policing the financial sector.

Improvements in Handling Consumer Complaints

There are a number of bodies to help Australians resolve disputes with financial services providers. This Government is committed to ensuring that these bodies are working as effectively as possible and delivering the best possible outcomes for consumers and small businesses.

Australia’s Financial Ombudsman Service (FOS) is a critical component of Australia’s financial sector. FOS helps to deliver fair outcomes for consumers by working to resolve disputes between consumers and their financial institutions quickly and efficiently, and at no cost to complainants.

The Government believes that there would be advantages in extending the FOS’s current jurisdiction to include a wider range of small businesses loans, as well as conducting a review of monetary limits and compensation caps. To facilitate this, we have asked ASIC to work with FOS on an immediate review of FOS’s small business jurisdiction under its Terms of Reference.

The Government is also providing additional funding for the Superannuation Complaints Tribunal of $5.2 million to help deal with legacy complaints and improve internal processes.

Establishment of a panel to advise on consolidation of disputes and complaints function

The Government will establish a panel of eminent persons to review the role, powers and governance of all of the financial system’s external dispute resolution and complaints schemes and will assess the merits of better integrating these schemes to improve the handling of consumer complaints. This Panel will report back to the Government by the end of 2016. 

The Government is keen to ensure that the user experience of complaint handling services is smooth, simple and fair. The Government shall explore the possibility of having a one-stop-shop for handling consumer disputes and complaints.

Extension of ASIC Chairperson term

Continuity of the leadership of ASIC is necessary to provide support for the implementation of these important reforms and to bolster consumer confidence in the financial sector.

Therefore the Government intends recommending to the Governor-General that Mr Greg Medcraft be extended as ASIC Chairperson for a further 18 months, to oversee the implementation of this critical package of reforms.

Appointment of additional ASIC Commissioner

To further support Mr Medcraft and the ASIC Commissioners in this important work, the Government also intends to appoint an additional ASIC Commissioner.

This new Commissioner will have experience in the prosecution of crimes in the financial services industry.

Copies of the ASIC Capability Review and the Government’s response are available on the Treasury website. The Government’s response to the recommendations of the Capability Review directed to it is also available on the Treasury website.

ASIC’s Implementation Plan is available on the ASIC website.

The Government wishes to thank the Chair of the Panel, Ms Karen Chester, and the other members of the Panel, Mr Mark Gray and Mr David Galbally AM QC, for their work.