On 24 July 2015, the then Assistant Treasurer, the Hon. Josh Frydenberg MP, announced a review to consider the capabilities of the Australian Securities and Investments Commission (ASIC).
The Capability Review forms part of the Government's response to the Financial System Inquiry (FSI) which recommended periodic reviews of the capabilities of financial and prudential regulators, commencing with a review of ASIC in 2015 to ensure it has the skills and culture to carry out its role effectively.
Findings of the Capability Review will also provide information to assist the Government's consideration of the FSI recommendation for ASIC's regulatory activities to be funded by industry.
The Review was led by an Expert Panel, chaired by Ms Karen Chester with Mr Mark Gray and Mr David Galbally AM QC as members, and supported by a team of public and private sector personnel.
Terms of Reference
The Review was required to consider how ASIC uses its current resources and powers to deliver its statutory objectives and assess ASIC's ability to perform as a capable and transparent regulator. The Capability Review was asked to examine, and make recommendations on how efficiently and effectively ASIC operates to achieve its strategic objectives, including:
- identification and analysis of immediate and forward-looking priorities or risks;
- resource prioritisation and responsiveness to emerging issues, including:
- how ASIC allocates its current resources among its regulatory tools, such as supervision, surveillance, education, policy, enforcement and litigation; and
- how ASIC allocates its current resources across its regulated population.
- the skills, capabilities and culture of the Commission and its staff, including in respect of internal review and improvement mechanisms; and
- organisational governance and accountability arrangements.
The Capability Review was asked to have regard to how comparable international regulators operate and relevant legislation, including the Public Governance, Performance and Accountability Act 2013 (PGPA Act).
In assessing ASIC's approach to its statutory objectives, the review could provide observations, but not make recommendations on ASIC's regulatory framework or powers.
The Expert Panel was asked to provide a report to Government by the end of 2015.
Consultation
The Expert Panel consulted extensively with ASIC, private sector businesses regulated by ASIC, peak bodies, regional and consumer representatives and other stakeholders.
The Capability Review has been informed by a review of ASIC's current processes, consultation with the senior leadership of ASIC, its staff, other public sector agencies who interact with ASIC, a spectrum of private sector businesses and licensees regulated by ASIC, peak bodies, regional and consumer representatives, professional firms (legal and accounting) which have regular dealings with ASIC, and members of the judiciary. It has also been informed by an analysis of the approaches and capabilities of comparable foreign regulators in major markets such as the United States, United Kingdom, Europe, Canada, Asia (including Hong Kong, Singapore, Malaysia) and New Zealand.
Expert Panel
Ms Karen Chester (Chair)
Ms Karen Chester is a Commissioner with the Productivity Commission. Ms Chester was previously a Partner in Mercer's global investment business, held senior executive positions with Access Capital Advisers and was the Chief Executive Officer of its corporate predecessor, Access Economics. Before her move to the private sector, Ms Chester held senior roles in the Australian public service.
Mr David Galbally AM QC
Mr David Galbally AM QC is a partner at Madgwicks Lawyers. Mr Galbally has extensive experience in commercial litigation and dispute resolution, including matters relating to corporate governance, human rights, privacy and superannuation regulation. He was appointed as Queen's Counsel in 1996. In 2013, he was appointed to the Order of Australia in the General Division for significant service to the community, particularly through leadership in health organisations and the provision of pro bono legal services.
Mr Mark Gray
Mr Mark Gray has held Chief Executive positions with the Queensland Treasury, the Queensland Competition Authority and the Queensland Commission of Audit. Mr Gray has also held senior executive positions with the Macquarie Group and BDO and is an Adjunct Professor of Economics at the University of Queensland.
Acknowledgments
The Panel would like to thank ASIC staff, senior executive leaders, the Chairman, Deputy Chairman and other Commissioners for their assistance and engagement in the Review.
The Panel would also like to thank everyone who gave generously of their time and insights by participating in the Panel's stakeholder roundtables, one-on-one interviews, meetings, surveys, and went to the effort of preparing submissions.
Chairs and members of ASIC's external committees and panels also gave generously of their time and allowed the Panel to attend and observe their meetings during the course of our review. The Panel also benefited from the considered observations of members of Australian superior and appellate courts.
The Panel would also particularly like to thank:
- Jacob Hook (Oliver Wyman) and Jeff Carmichael (Promontory Financial Group) for generously sharing their insights and expertise on regulatory best practice in Australia and internationally; and
- Maile Carnegie for insights and access to recent innovative research by Google (Project Oxygen) on the characteristics of high performance teams.
These contributions provided the Panel with crucial insights into the issues it was asked to consider.
The Panel wishes especially to acknowledge the assistance of PricewaterhouseCoopers (in particular Hugh Harley, Nicole Salimbeni, Iain Chalmers, Jenn Whittaker, Kirsty Forrest and Blake Woodward) for identifying, collating and preparing evidentiary material for the Review.
Finally, the Panel also wishes to acknowledge the support provided by members of the Treasury Secretariat and Treasury officials: Rupert Jolley, Percy Bell, Camille Blackburn, Kylie Bourke, Andrew Craston, Shellie Davis, Fiona Deegan, Alex Le, Kate Mills, Scott Mischke, Trevor Rose, Jessica Stone and Callie Voulgaris.