A key superannuation industry body has strongly urged against the adoption of a co-regulatory approach to the superannuation industry.
The Association of Superannuation Funds of Australia (ASFA) has used a submission responding to a Treasury Consultation Paper on Industry Codes in the Financial Sector to express concern about co-regulation and the role of the Australian Securities and Investments Commission (ASIC).
“We have concerns that a co-regulation model that provides ASIC with the ultimate authority to approve, monitor industry and enforce codes will add to the regulatory burden and not lead to better consumer outcomes,” the submission said.
“ASFA sees a risk that the lines of responsibility and accountability are likely to become blurred – with the co-regulation model proposed – and this will impact on the ability for the industry to develop appropriate and flexible solutions to improve consumer outcomes,” it said.
The submission said ASFA supported a self-regulation approach in which the need for a code covering a particular industry or particular matters was determined by the industry and consumers, in consultation with stakeholders such as ASIC.
“However, there should be flexibility in the role that organisations such as ASIC should play in the process (that is, in terms of whether they approve, monitor and enforce a particular code),” the ASFA submission said.
Dealing with the issue in greater depth, the ASFA submission said the extension of ASIC’s authority into an already heavily regulated area “could lead to regulatory or jurisdictional overlap and result in uncertainty for members and the industry as to who is responsible for dealing with supervision, breaches and complaints”.
“For example, in superannuation it is possible that ASIC’s automatic involvement in any code that might be developed in the future could lead to overlap with the regulatory jurisdiction of [the Australian Prudential Regulation Authority] APRA or other bodies,” it said.
“This uncertainty would be remedied to an extent if ASIC’s involvement were only at the request of the industry when establishing a new code rather than automatic as it would be defined specifically under the industry code,” the submission said.