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Thursday, 16 May 2013
Page: 3494


Ms O'NEILL (Robertson) (13:40): 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.

In accordance with standing order 39(f) the report was made a parliamentary paper.

Ms O'NEILL: by leave—As much as I am very interested in the aged-care debate, I am glad to be speaking now on this report on the oversight of ASIC, which is of great interest to the community, particularly to those who work in the sector and those of us who rely on ASIC, along with APRA, to provide a stable and safe banking and investment sector. This report is part of the committee's ongoing oversight of the Australian Securities and Investments Commission in which it seeks to determine if ASIC is fulfilling its statutory responsibilities.

As the corporate markets and financial services regulator, ASIC is responsible for monitoring the integrity of Australia's financial system. Areas within ASIC's remit include promoting financial literacy and consumer education, corporate financial services, consumer credit regulation and the supervision of trading on Australia's licensed equity derivatives and futures market.

The inquiry focused on key areas of ASIC's responsibility as well as issues of particular interest to the committee relating to topical and significant matters before ASIC. The standard of audit quality has been a concern for ASIC in recent years. ASIC's most recent audit quality report found a further decline in auditing standards. In its quest to improve audit quality, Australia has two crucial and unique attributes: firstly, an audit regulation framework and, secondly, an audit review process and in particular ASIC's audit inspection program. ASIC is a statutory body under the federal legislation, and accounting and auditing standards and auditor independence are all legally enforceable under the Corporations Act. These factors contribute significantly to the robustness of the audit regulation framework.

The ASIC oversight hearings in March 2013 provided the committee with an opportunity to explore audit quality issues with some of the bodies involved in the auditing process, including the Auditing and Assurance Standards Board, the Financial Reporting Council, the Institute of Chartered Accountants in Australia, CPA Australia, Treasury and ASIC. The committee recognises that auditors play a crucial role in the system and is keen to ensure that ASIC retains a strong focus in this area. ASIC has responsibility for the supervision of real-time equities trading on Australia's domestic licensed market. Part of ASIC's remit is to examine market changes and determine the adequacy of the existing regulatory regime. ASIC's key objective is to promote investor confidence through fair and efficient markets.

Australia's financial markets are undergoing significant structural and behavioural changes. Two areas of evolution both within Australia and globally are high-frequency trading and dark liquidity, which is also referred to as 'dark venues' or 'dark pools'. High-frequency trading and dark liquidity have been the subject of considerable media attention and public concern. On 18 March 2013 ASIC released two reports on high-frequency trading and dark liquidity. The committee has examined these reports and will be pursuing the issues raised in these reports at the next oversight hearing.

The committee's 2009 inquiry into financial products and services led to the introduction and passing of the future of financial advice legislation to reform the financial services industry in Australia. ASIC undertook a consultative process on developing the FoFA reforms, including well-attended workshops in capital cities around Australia. ASIC has now finalised its regulatory guidelines on the FoFA reforms and has indicated it will take a constructive and facilitative approach to compliance in the first year.

Debate interrupted.