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What do financial services regulators actually do?

  • The various regulators have specific areas of operation, but there are overlaps.
  • The regulators work together to try to promote a responsible financial services industry.
  • In addition to enforcement powers, the regulators aim to play an educational role.

There are Australian government bodies that monitor the conduct of financial advisers and related parties in relation to financial services. They are there to help and protect you against substandard and potentially damaging advice, and hold the financial services industry accountable.

what do asic and apra actually do

ASIC


The Australian Securities and Investment Commission (ASIC) provides regulatory guidance for the financial services industry, consumer credit industry and trading markets. It aims to protect consumers, investors and creditors.

ASIC has the power to:

  • issue licences to companies or individuals so they can provide advice in their designated areas (e.g. insurance, managed investments) as detailed in their financial services guide (FSG).
  • take action (e.g. enforceable undertakings, disqualification and court action) against companies or individuals who do not follow their legal obligations.

In addition to regulating the financial advice industry, ASIC supervises trading on Australia's licensed markets, such as the Australian Securities Exchange and Chi-X, which need to comply with ASIC's market integrity rules.

ASIC's "pub tests"

In making its assessments, ASIC looks at things in the context of what a "reasonable person" would think or do. However, in the context of responsible lending, ASIC uses the gauge of "not unsuitable" as opposed to suitable.

APRA


The Australian Prudential Regulation Authority (APRA) oversees banks, credit unions, building societies, general and life insurance companies, and most of the superannuation industry (SMSFs are regulated by the Australian Taxation Office). But APRA's job is to ensure that Australia has a stable, competitive financial system, not to look out for consumers.

The ATO


Apart from collecting tax, the Australian Taxation Office (ATO) regulates SMSFs. It provides guidance on how trustees should run their SMSFs. It also produces rulings and determinations in relation to taxation law.

AUSTRAC


The Australian Transaction Reports and Analysis Centre (AUSTRAC) aims to detect, deter and disrupt criminal activity in the financial services and other industries.

Did you know?

A "threshold transaction" is the transfer (either receiving or paying money) of physical currency of $10,000 or more as part of a designated service. As reporting entities, financial advisers must report such transfers to AUSTRAC in a threshold transaction report (TTR) within 10 business days.

 The financial services laws you should know
 Do financial advisers need to be licensed?