The Australasian Compliance Institute (ACI) recently called upon the Federal Government to establish an education fund for the improvement of compliance and risk practices within Australia’s financial services industry.
Under the previous supervisory arrangements of Australia’s equities and futures markets, the Australian Stock Exchange (ASX) had established a fund that was employed to improve market practices via the education of market participants and listed companies.
The money collected from breaches of ASX rules – more than $1 million to date – was pooled and then spent on targeted programs that addressed areas of regulatory concern in the market.
However, under new supervisory arrangements, the money collected by the Australian Securities and Investment Commission (ASIC) will be returned to the government via consolidated revenue.
This removes a valuable regulatory tool that can be used to contribute to Australia’s transparent financial services industry where investor interests can be protected, according to the ACI,
“Generally there is widespread support for the transfer of market supervision from ASX to ASIC, however one concern we have heard repeatedly from numerous market participants and ACI members has been about the loss of this significant source of industry education financing under the new arrangements,” said Martin Tolar, CEO of the ACI, which has proposed an industry education fund that would be managed by a combination of ASIC and industry representatives.
It would be the responsibility of the education fund managers to identify areas of regulatory concern, identify appropriate training measures and monitor the success of the programs.
Funding could be achieved in two ways, according to the ACI: first, a fixed proportion of fines would be returned from the Commonwealth to the fund. Secondly, enforceable undertakings with market participants issued by ASIC could include a mandatory condition for the offending party to deposit a sum of money into the fund for the benefit of the financial community and investors.
“Experience and research has shown that one of the most effective tools available to regulators to ensure that sound compliance and risk management practices are employed by industry, is via education,” said Tolar.
“ACI believes that the reestablishment of the fund under ASIC’s supervision regime is essential to ensure that Australia’s equity and futures markets continue to develop sound compliance and risk management practices, which will in turn help to provide improved industry practice and consumer protection.”