Chapter 1Introduction

1.1On 27 October 2022, the Senate referred an inquiry into the Australian Securities and Investments Commission (ASIC) to the Senate Economics References Committee (committee) for inquiry and report by the last sitting day in June2024.[1]

1.2Under the terms of reference, the committee was required to examine the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of alleged misconduct, with particular reference to:

(a)the potential for dispute resolution and compensation schemes to distort efficient market outcomes and regulatory action;

(b)the balance in policy settings that deliver an efficient market but also effectively deter poor behaviour;

(c)whether ASIC is meeting the expectations of government, business and the community with respect to regulatory action and enforcement;

(d)the range and use of various tools and their effectiveness in contributing to good market outcomes;

(e)the offences from which penalties can be considered and the nature of liability in these offences;

(f)the resourcing allocated to ensure investigations and enforcement action progresses in a timely manner;

(g)opportunities to reduce duplicative regulation; and

(h)any other related matters.[2]

1.3On 24 June 2024, the Senate granted the committee an extension of time to report to 3July 2024.[3]

Conduct of the inquiry

1.4The committee advertised the inquiry on its website and invited written submissions by 3 February 2023. The committee also wrote directly to relevant stakeholders to invite them to make a submission. Due to the high level of interest in the inquiry, the committee extended the due date for submissions to 28 February 2023.

1.5The committee received 198 submissions and 12 supplementary submissions, as well as additional information and answers to questions on notice, as listed at Appendix 1. The committee also received correspondence from individuals who raised concerns about ASIC’s performance.

Public hearings

1.6The committee held five public hearings for the inquiry, as noted below.

1.7A list of the witnesses that appeared at the hearings is listed at Appendix2.[4]

1.8ASIC gave evidence at the committee’s hearing on 23 June 2023. ASIC also gave evidence at Senate estimates hearings held during the course of the inquiry and relevant evidence from those hearings has been incorporated in this report.

Interim report

1.9On 20 June 2023, the committee tabled an interim report in relation to 13 public interest immunity claims that ASIC made over information requested by the committee during the inquiry.[5]

1.10The committee accepted two of ASIC’s public interest immunity claims, as the requested information related to ongoing ASIC investigations.[6] However, the committee rejected the remaining eleven claims as ASIC did not provide sufficient evidence of the harms that would arise from providing the information requested by the committee.[7] As a result, the Senate ordered ASIC to provide the information from the public interest immunity claims rejected by the committee.[8]

1.11The committee’s concerns regarding ASIC’s engagement with the inquiry are discussed in further detail in Chapter 2.

Acknowledgements

1.12The committee thanks the individuals and organisations who made written submissions and gave evidence at the committee’s public hearings.

1.13In particular, the committee thanks the individuals who made submissions which shared their personal experience with corporate misconduct. In many cases, the committee heard from people who lost significant sums of money and have experienced severe financial hardship as a result. As a result of their financial loss, some submitters have experienced significant adverse impacts on their health, social well-being and retirement outcomes.

1.14The committee also received many submissions from individuals who raised concerns about ASIC’s handling of their cases. This information was considered by the committee and helped inform the focus of this report.

Scope and structure of the report

1.15The evidence received by the committee covered a range of issues regarding ASIC’s performance as Australia’s corporate regulator. The report centres on the key themes emerging from that evidence.

1.16The report contains eight chapters:

Chapter 1—outlines the scope and conduct of the inquiry;

Chapter 2—considers ASIC’s engagement with the committee, including the public interest immunity claims made by ASIC;

Chapter 3—provides an overview of ASIC’s role in regulating Australia’s corporate and financial system, with a particular focus on ASIC’s remit;

Chapter 4—examines evidence regarding ASIC’s approach to investigating corporate misconduct, with a particular focus on ASIC’s handling of reports of alleged misconduct;

Chapter 5—examines evidence regarding ASIC’s approach to enforcement, particularly whether current enforcement outcomes are appropriate;

Chapter 6—considers ASIC’s resourcing, particularly whether its industry funding model is fair and effective for regulated entities;

Chapter 7—considers issues related to the governance of ASIC, particularly concerns regarding ASIC’s organisational culture; and

Chapter 8—provides the committee’s conclusions and recommendations.

1.17Further information relevant to the committee’s inquiry is contained in the following appendices:

overview of the legislation administered by ASIC (Appendix 4); and

past reviews which have considered ASIC’s performance (Appendix 5).

Footnotes

[1]Journals of the Senate, No. 18, 27 October 2022, pp. 528–529.

[2]Journals of the Senate, No. 18, 27 October 2022, pp. 528–529.

[3]Journals of the Senate, No. 112, 24 June 2024, p. 3441.

[4]Please note that the Hansard transcripts for the hearings are published on the inquiry webpage at: www.aph.gov.au/Parliamentary_Business/Committees/Senate/Economics/ASICinvestigation

[5]Journals of the Senate, No. 54, 20 June 2023, pp. 1557–1558.

[6]Senate Economics References Committee, Interim Report: Public interest immunity claims, June 2023, pp. 1–2, [11].

[7]Senate Economics References Committee, Interim Report: Public interest immunity claims, June 2023, pp. 1, [15–16], [19–20].

[8]Journals of the Senate, No. 54, 20 June 2023, pp. 1557–1558.