Australia Corporate Watchdog Faces Senate Calls for Breakup
(Bloomberg) -- Australia’s corporate watchdog should be split in two and whistleblowers should receive compensation as part of reforms aimed at boosting its enforcement capabilities.
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Those changes are among the 11 recommendations made in a Senate committee report into the Australian Securities and Investments Commission released Wednesday. They will allow a separate entity to focus on financial-services firms, while another oversees all other companies. Treasurer Jim Chalmers has yet to respond to the recommendations but said on Tuesday that he would examine the report.
Australian lawmakers have spent nearly two years examining what can be improved at the country’s corporate regulator, now under the stewardship of Chair Joe Longo, amid allegations its remit is too broad. Breaking the organization into an entity focused on policing banks and another focused on regulating non-financial companies will provide a more consistent approach to corporate regulation and law enforcement, according to Andrew Bragg, who chaired the committee behind the report.
“These measures, if adopted, would provide Australians with the protection and confidence which is sadly absent,” Bragg said in a statement. The committee uncovered “an organization without transparency, few prosecutions, and a litany of cultural, structural and governance issues.”
ASIC will take time to consider the report, a spokesperson for the regulator said.
The findings follow public condemnation from former chair of the enforcement agency James Shipton who first suggested a breakup last year as part of a suite of reform proposals. He said the agency had become overburdened and underfunded.
Cases initiated from ASIC referrals dropped from 75% in 2018 to 19% in the last financial year, the national public prosecutors department revealed as part of the inquiry.
The impact to ASIC may ultimately remain limited unless the committee’s recommendations can get the support of Australia’s governing Labor party, which may choose not to adopt them, leaving any reform hinging on a change of government in the federal elections due by next May.
--With assistance from Ainsley Thomson.
(Updates with ASIC comment in fifth paragraph)
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