Jul 1, 2014

It’s not just the CBA: the bigger picture of ASIC’s aversion to regulation

The problems in ASIC's regulation of financial services aren't confined to the Commonwealth Bank, and they're continuing right now.

Bernard Keane ā€” Politics editor

Bernard Keane

Politics editor

I’ll start this piece on the ASIC inquiry report and superannuation calculators with a methodological note. I sense the eyes of even Crikey’s sophisticated, engaged and informed readership begin to glaze over when we cover financial matters, so I want to offer a super-short explainer of why this stuff is very important.

By virtue of compulsory superannuation, over 20 years without a recession and rising incomes, Australia has vast treasury of personal wealth, soon be worth $2 trillion, and even with baby boomers drawing down on it in retirement, that treasury has been estimated to reach over $7 trillion by the 2030s. Effectively managing Australians’ access to those savings in coming decades is a critical economic and fiscal question, which will play a big role in the budgetary and macroeconomic decisions treasurers and other key policymakers will make in decades to come.

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4 thoughts on “It’s not just the CBA: the bigger picture of ASIC’s aversion to regulation

  1. klewso

    I can see a need to electronically record every meeting you have with these planners?
    Let’s face it, they live in these waterholes – they know where every submerged log and rock is – we’re just there, in and out, for a dip.
    And ASIC will continue bringing up the rear – with tax-payer funded bucket and shovel.

  2. Victor Boase

    Well said Bernard. You might also want to comment on why it is a sustainable policy position for governments to allow an investment pool mandated by government to be subject to the most rapacious ticket clipping in the world by fund managers? Fund management fees are 100-200% higher than the USA and UK. And calculating these fees on the asset base under management! The bigger the fund the bigger the fee! Despite any number of studies to demonstrate consistently better returns from active management of assets, there are very few managers who perform better than the asset category index over the medium and longer term. Given the public policy basis for the investment pool why has there not been a regulatory framework applied to how it is managed. How about starting with base fees of say 1% and anything charged above that, only on a success fee basis?
    Rationalisation of Super funds to reduce administration costs has now reduced the number of corporate funds to a fraction of the past and produced significant savings for members. While Fund managers compete on an allegedly superior performance basis there is little evidence of price competition. Trustee Directors are now generally a pretty professional bunch but they can find little competition between fund managers to further benefit members with lower management fees. Fund managers just lick their lips as they survey this ever growing herd of captive cows waiting to be milked!

  3. Gregory Grasshopper

    Good work Bernard.I will admit that your opening paragraph was necessary for me to keep reading.

  4. 4567

    Well done – my eyes did not glaze over. Perhaps it’s because the topic has recently become pertinent…not interesting, just pertinent

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