Corporations and Financial Services Committee Report

I too am pleased to speak to the report of the Joint Committee on Corporations and Financial Services, Statutory oversight of the Australian Securities and Investments Commission. As the chair of the committee, the member for Oxley, has noted, this committee reports to parliament from time to time on ASIC's activities. Let me take a moment to focus on the litigation ASIC undertakes, its work promoting financial literacy and its possible role in the regulation of the not-for-profit sector.

Turning firstly to litigation, a key interest for the committee is ASIC's involvement with both civil and criminal litigation. The committee notes with approval ASIC's compliance, as indicated by the Office of Legal Services Coordination, with the Legal Services Directions, which impose on ASIC an obligation to act as a model litigant. Given the complex nature of the litigation ASIC pursues, the committee considers that ASIC must have ready access to highly qualified and experienced legal counsel to conduct litigation. The committee has previously commented that it is essential for ASIC to have dispassionate and expert legal opinion about the prospects of any proposed litigation.

The exemption from the Legal Services Directions that allows ASIC greater flexibility in engaging counsel expires in June this year. It would be of significant concern were the Legal Services Directions to impede ASIC's access to high-quality legal services and thereby undermine ASIC's effectiveness as a regulator. For this reason the committee submits that the Office of Legal Services Coordination should carefully consider extending the exemption beyond June 2011.

Turning secondly to financial literacy, the committee is keen to support initiatives which promote financial literacy amongst the Australian community as a whole and amongst retirees in particular. For this reason the committee notes with approval the development of the MoneySmart website. This builds on the foundation provided by ASIC's previous website, known as FIDO, and the interactive consumer information and tools provided on that website. The committee takes a keen interest in financial literacy amongst retirees. The committee will closely watch the research ASIC is conducting into financial advice provided to those considering retirement. The committee looks forward to the outcomes of that research.

The third area I wish to address is the question of how the not-for-profit sector is to be regulated. At present, regulation of this sector is fragmented. Multiple agencies have responsibility for the sector, including ASIC. There has been a recent Productivity Commission report into this matter. The report recommended that, as an interim measure, ASIC should assume responsibility for all regulatory functions relating to not-for-profit organisations. The committee is aware that the Australian government is currently considering this proposal. The Treasury is releasing a consultation paper that outlines options for the combined regulatory functions being undertaken by ASIC or the Australian Taxation Office.

I would like to communicate to the House the committee's view that ASIC is an effective regulator; however, the committee is concerned that any suggestion that ASIC should expand its responsibilities carries with it the risk of diluting ASIC's expertise and effectiveness. Accordingly, any move to expand ASIC's regulatory ambit must be appropriately resourced.

Finally, I join with the chair of the committee in thanking Tony D'Aloisio for his work during his term as chairman of ASIC. Similarly, I join with the chair and the rest of the committee in welcoming Mr Medcraft to the position of chairman of ASIC. Like the rest of the committee, I very much look forward to working with him and his team.