© Australian Securities and Investments Commission, 2011. ISBN 978–0–9805533–6–9 About this report This report contains the text of presentations and panel sessions delivered at the ASIC Summer School 2011 – ‘The New Regulatory Landscape’. The report text is based on presentations supplied by speakers and on transcripts of panel sessions, and edited to ensure consistency of style. While every effort has been made to ensure accuracy, readers should note that the report text may contain transcription or other errors. Chairman’s foreword The Australian Securities and Investments Commission was pleased to host the ASIC Summer School 2011 in Sydney from 21 to 23 March 2011. This was our 16th successive Summer School. This year is a particularly important one for ASIC, as it marks the 20th anniversary of our formation as the Australian Securities Commission in 1991. The theme for this year’s event was ‘The New Regulatory Landscape’. With the significance of our anniversary year in mind, we reflected on the history of corporate and financial services regulation in Australia over the last few decades, as well as looking to the future. Over the course of two-and-a-half days, our focus turned from market integrity to retail investors and consumers, and finally to facilitating business in Australia. This report is a record of presentations and panel discussions from the plenary and associated panel sessions. It also includes PowerPoint presentations, where relevant. Thank you to everyone who contributed to the success of this year’s Summer School. I hope you find this report useful. Tony D’Aloisio Chairman, ASIC 2 Australian Securities and Investments Commission | ASIC Summer School 2011 Contents MONDAY 21 February 2011 4 The new regulatory landscape: Opening and welcome address Tony D’Aloisio, Chairman, ASIC 11 Session 1: Directors – the changing landscape Moderator: Tony D’Aloisio, Chairman, ASIC 12 Corporate governance – 20 years on Paper from Professor Bob Baxt, Partner, Freehills; Professorial Associate, The University of Melbourne; Honorary Professor of Law, Griffith University, Queensland 33 Bringing new ideas to the table Panel discussion moderated by Tony D’Aloisio, Chairman, ASIC Panel: Quentin Digby, Partner, Freehills; Belinda Gibson, Deputy Chairman, ASIC; Professor Ian Ramsay, Harold Ford Professor of Commercial Law; Director, Centre for Corporate Law and Securities Regulation; Director, Melbourne Law School, The University of Melbourne; Jenny Seabrook, Non-Executive Director, Australia Post, Bank of Western Australia Ltd, Iluka Resources Limited, IRESS Market Technology Limited; Special Adviser, Gresham Partners Limited; John Thorn, Non-Executive Director, Amcor Limited, Caltex Australia Limited, National Australia Bank Limited, Salmat Limited 46 Session 2: The new market landscape – integrity, supervision and competition Moderator: Martin Wheatley, Chief Executive Officer, Securities and Futures Commission, Hong Kong 47 The Australian market – how has the terrain changed? Professor Carole Comerton-Forde, Professor of Finance, Australian National University 67 Building the infrastructure for market competition Panel discussion moderated by Martin Wheatley, Chief Executive Officer, Securities and Futures Commission Panel: Professor Carole Comerton-Forde, Professor of Finance, Australian National University; Duncan Fairweather, Executive Director, Asia–Pacific, Optiver Training; Paul Hilgers, Chief Executive Officer, Asia–Pacific, Optiver Trading; David Horsfield, Managing Director and Chief Executive Officer, Stockbrokers Association of Australia; Shane Tregillis, Commissioner, ASIC TUESDAY 22 February 2011 80 Session 3: The future of financial advice Moderator: Belinda Gibson, Deputy Chairman, ASIC 81 The FoFA reforms – an update Associate Professor Joanna Bird, Ross Parsons Centre of Commercial Corporate and Taxation Law, Faculty of Law, The University of Sydney 94 The future of financial advice – what does it look like? Panel discussion moderated by Belinda Gibson, Deputy Chairman, ASIC Panel: Associate Professor Joanna Bird, Ross Parsons Centre of Commercial Corporate and Taxation Law, Faculty of Law, The University of Sydney; John Brogden, Chief Executive Officer, Financial Services Council; Professor Dimity Kingsford Smith, Faculty of Law, The University of New South Wales; Jenni Mack, Chair, Choice 104 Update of financial literacy strategy Paul Clitheroe AM, Chairman, Financial Literacy Board; Executive Director, ipac securities 3 109 Session 4: Regulating financial risk – how far do we go to protect retail investors and consumers? Moderator: Greg Medcraft, Commissioner, ASIC 110 Beyond disclosure – where is the consumer in consumer protection? Dr Paul Harrison, Deakin Graduate School of Business, Deakin University 128 Risky decisions – retail investors and complex products Panel discussion moderated by Greg Medcraft, Commissioner, ASIC Panel: Dr Paul Harrison, Deakin Graduate School of Business, Deakin University; Peter Kell, Deputy Chair, Australian Competition and Consumer Commission; Geoff Lloyd, Group Executive, Private Wealth, Perpetual; Catriona Lowe, Co-Chief Executive Officer, Consumer Action Law Centre 141 Tuesday lunch address Martin Wheatley, Chief Executive Officer, Securities and Futures Commission, Hong Kong WEDNESDAY 23 February 2011 147 Session 5: Credit – the next phase Moderator: Dr Peter J. Boxall AO, Commissioner, ASIC 148 Australia’s new consumer credit framework – Phase 1 implementation … and now for Phase 2 Dr Justi Roseman, Special Counsel, Corporate – Financial Institutions and Markets, Blake Dawson Waldron 168 Session 6: Business as usual? Issues for SMEs Moderator: Dr Peter J. Boxall AO, Commissioner, ASIC 169 Facilitating business – cutting red tape and the cost of compliance Kathrine Morgan-Wicks, Senior Executive Leader, Real Economy, ASIC Rachel Johnson-Kelly, Chief Information Officer, ASIC 193 Challenges for small businesses in the current climate Panel discussion moderated by Michael Dwyer, Commissioner, ASIC Panel: Joseph Healy, Group Executive Business Banking, National Australia Bank; Peter Strong, Executive Director, Council of Small Business of Australia; Carl Walsh, Chief Executive, WHK Melbourne 207 Meet the Commission Panel discussion moderated by Peter Thompson, ABC Television and ABC Radio Broadcaster Panel: Tony D’Aloisio, Chairman, ASIC; Belinda Gibson, Deputy Chairman, ASIC; Dr Peter J. Boxall AO, Commissioner, ASIC; Michael Dwyer, Commissioner, ASIC; Greg Medcraft, Commissioner, ASIC; Shane Tregillis, Commissioner, ASIC PROFILES 224 ASIC Commission 228 Speakers, panellists and moderators 4 Australian Securities and Investments Commission | ASIC Summer School 2011 MONDAY 21 February 2011 The new regulatory landscape: Opening and welcome address Tony D’Aloisio, Chairman, ASIC Good morning everyone and welcome to the outset, I would like to sincerely thank ASIC’s Summer School 2011. I am Tony all of them for giving up their time and for D’Aloisio, the Chairman of ASIC, for those providing us with their expertise and their of you who don’t know me. On behalf of insights. my fellow commissioners, Dr Peter Boxall, In recent years, the Summer School has Michael Dwyer, Belinda Gibson, Greg focused, naturally, on the global financial Medcraft and Shane Tregillis, and on behalf crisis (GFC). However, this year we are back of all the ASIC staff, I welcome and thank you to our regulatory landscape, with a lot of for supporting this important event. those issues now hopefully behind us. Summer School really offers an important Now, I hope you have noticed that ASIC opportunity, both to get to grips with what turns 20 this year. It is an important is happening in the markets and to meet milestone for us as a regulator and really and network with other participants from for Australia as a whole. It is particularly Australia and around the world. For those of important to ASIC staff – men and women you visiting Sydney for the first time, we hope who have devoted their energies to making a that you do enjoy this wonderful city. difference in public service. Today, we have This year, we have over 400 participants some 233 of our staff, around 10%, that were at the Summer School, which breaks our here 20 years ago. record from last year, both domestic and Before going to my comments about the 20 international attendees, as well as ASIC staff. years, I would like to read a statement that I We have some 40 ASIC staff drawn from received this morning from the Parliamentary across the country. In addition, we have Secretary assisting the Treasurer, David our senior leaders, regional commissioners Bradbury, who has overall responsibility for and, of course, our commissioners are ASIC with the Treasurer. He asked me to also present. We see this event as a very read this statement: important event for ASIC to remain close to its markets, and so it is important for I would like to send my warmest us to ensure that the whole of ASIC gets congratulations to ASIC on its 20th the benefit of the Summer School and, as anniversary. As our independent regulator such, the plenary sessions will be played over the last two decades, ASIC has throughout ASIC this afternoon. shown itself to be a cornerstone of the framework that has distinguished We have, of course, been very fortunate Australia’s corporate landscape from to secure an impressive list of speakers our international peers. The resilience and panellists each year, and particularly of Australia’s corporate sector during this year. Each is