The Australian Securities and Investments Commission (ASIC) is the centrepiece of Australia’s system of corporate and financial regulation. When corporate misconduct occurs, Australians expect that ASIC will investigate promptly, take appropriate enforcement action and deter future breaches of the law. Evidence to this inquiry has made clear the deep flaws in ASIC’s approach to investigation and enforcement. This inquiry report finds that too often, ASIC fails to respond to early warnings of corporate misconduct and does not routinely use the full extent of its powers to achieve strong enforcement outcomes.

ASIC’s success rests on it having the right remit and powers, the right people and resources and the right governance and oversight arrangements. These factors have fallen out of balance. As a result, ASIC’s capacity to respond to corporate misconduct is now compromised by significant structural, resourcing and cultural issues.

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

The 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.

Key recommendations

• The Committee recommends that the Australian Government should recognise that the Australian Securities and Investments Commission has comprehensively failed to fulfil its regulatory remit.
• The Committee recommends that the Australian Government should recognise that the Australian Securities and Investments Commission’s regulatory failures call into question whether its remit is too broad for it to be an effective and efficient agency, and the government should strongly consider separating its functions between a companies regulator and a separate financial conduct authority.
• The Committee recommends that the Australian Government make it a legislated regulatory objective of the Australian Securities and Investments Commission or other regulatory authorities to establish and maintain a highlevel of transparency of investigation and enforcement outcomes.
• The Committee recommends that the Australian Government investigate amending the whistleblower protection provisions in the Corporations Act 2001 to include pecuniary incentives and compensation for whistleblowers who make a substantiated disclosure.