It's time to kill off ineffective and weak industry codes and give ASIC proper regulatory teeth according to consumer advocate CHOICE.
"The scandals of the Banking Royal Commission mean that we must change how financial services industry codes work in Australia," says Patrick Veyret, policy adviser at CHOICE.
"It's clear the industry cannot be trusted to write their own codes. We need to kill off useless codes and give ASIC real power to hold the finance industry to account."
In a submission to Treasury, CHOICE and the Superannuation Consumers' Centre have called on the next Federal Parliament to grant ASIC new rule-making powers. These powers would allow ASIC to write and administer mandatory financial services industry codes rather than allowing industry to write their own rules.
"Industry has little interest in addressing problems they're currently profiting from. This has consistently resulted in weak, unenforceable and ineffective codes," says Veyret.
"We need to take the rule development part of codes out of industry hands. ASIC should be granted new powers to write and administer mandatory financial services industry codes. This will ensure that the interests of Australians, not industry, are prioritised."
"CHOICE has been part of more failed industry code development processes than we can count. For example, the Life Insurance in Superannuation Code was meant to deal with longstanding issues with duplicate accounts and poor value insurance. Instead, industry delivered one of the weakest codes in the financial services sector."
Industry groups that made the final decision about the Life Insurance in Superannuation Code settled on an unenforceable code that operates on an "if not, why not basis" . This means funds can breach any part of the code so long as they have a reason, however there is no authority to check whether the reason is justified or based on evidence of any kind.
Quotes attributable to Patrick Veyret, Policy and Campaigns Adviser at CHOICE.
Media contact: Jonathan Brown, 0430 172 669, firstname.lastname@example.org