Labor will be launching an intensive attack on the Australian Securities and Investments Commission (ASIC) next week over what Senator Nick Sherry described as its failure to adequately regulate the financial services industry.

Sherry, Labor shadow minister for financial services, said he would be using next week’s Senate Estimates hearing to grill ASIC over the Westpoint scandal as well as to pose other questions including; what is the extent of poor advice given by financial planners on switching super funds, and; why disclosure statements are still too long. “Disclosure statements are unreadable,” Sherry told I&T News yesterday. “They are way too complex and consumers don’t understand them. Consumers just need basic information in disclosure documents.” He said Labor will be calling for disclosure statements to be “no more than two pages long” with investors given the option to receive a fuller document if required. Labor will also be proposing that different financial products be regulated separately depending on their complexity and the potential for consumers to be misled. As well, Sherry said Labor would press ASIC for more details on how it is regulating the choice of fund legislation. He said the regulator has already supplied details of “five or six” cases of financial planners providing poor advice to clients to change funds since the choice legislation came into effect last year. Finally, Labor will ask ASIC to supply further information on the collapse of investment company Westpoint including where the funds were sourced from and what is the expected level of recovery for investors. “The fact ASIC has failed to prevent this disaster from occurring is consistent with the recent findings of the Australian Audit Office,” Sherry and Laurie Ferguson, shadow minister for consumer affairs, said in a statement. “By not addressing important regulatory risks, ASIC is sending consumers and industry the wrong signals about its ability to regulate this vital sector.” Sherry said that while there would always be company failures in a capitalist system which “no degree of regulation can prevent” the existing regulations are not good enough.

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