The banking watchdog has been ineffective for more than two decades and should be stripped of its powers, a competition expert claims.
Economist and former competition watchdog Allan Fels wants the Australian Securities and Investment Commission to be stripped of its powers.
The Australian Competition and Consumer Commission, which he chaired for eight years, should instead be put in charge of keeping the banks and financial services sector in line.
“It’s not feared, unlike the ACCC. It has a culture, it has a long-running culture of not vigorous, without fear or favour, law enforcement,” he told ABC radio.
A shift in regulatory responsibility to the ACCC was considered in the late 1990s, but lobbying by the financial services sector meant ASIC kept its powers.
“Even at that point it was obvious that ASIC was not up to the job, and nothing has changed,” he said.
Revelations from the banking royal commission confirm it’s time for fundamental change, he said.
The Turnbull government announced on Tuesday it would expand ASIC’s powers with a $70 million initiative to put corporate cops in the branches and head offices of banks and financial institutions to keep them in check.
Regulatory staff would be responsible for preventing breaches and cracking down on those caught doing the wrong thing.
Professor Fels also backed calls from the Greens to break up the big banks and AMP so they’re not specialising in deposits and loans, superannuation, insurance and complext wealth management advice.
While some are doing that themselves already, he said he wasn’t sure the market could be relied on itself to deliver the right result.