Submitted by: JamieMcIntyre

I think Greg Medcraft, whos been head of Australian Securities and Investments Commission (ASIC) for the last year, has done a good job compared to his predecessors.

Regulators should work cooperatively with the industry to better regulate industries they oversee.

A collaborative approach always works better, and gains the respect of the relevant industries.

Especially when there are so many grey areas in corporations law, unlike criminal law, which is generally black or white.

Because of the many grey areas where laws arent clear, its important industry regulators provide guidelines of what their interpretation of the law is, so companies know what is and isnt compliant. And if one disagrees with ASICs interpretation, theres always mediation, or courts to clarify the law.

Of course if theres blatant criminal activity, a regulator has to send white-collar criminals to jail, to scare people so they dont break black and white laws.

For example: if you rob a bank, you know youre committing a crime.

But you could easily breach a corporations law and be none the wiser.

Because many laws are not clear and only a court can determine if something is or isnt a breach, as both ASIC and the industry dont actually know.

And thats because many laws are untested or actually conflict with other corporations laws.

But in areas where there is uncertainty in relation to the law, regulators need to take a tread softly approach and educate on what they believe to be compliant behaviour, to achieve a fair outcome.

Mr Medcrafts leadership should be commended because it is collaborative approaches like this that encourage better working relationships with industry; and greater investor protection.

This is a far cry from a decade ago when ASIC was using suspect tactics with the courts and would point blank refuse to provide guidelines to industry, simply to increase their chances of capturing companies accidentally breaching uncertain laws to boost its report card.

My battles with ASIC a decade ago gave me great insight into how abuse can occur at the hands of overzealous bureaucrats given too much power.

And how they can often go on relentless non-commercial pursuits to target certain sectors of industry, while neglecting to keep an eye on important, obvious areas.

Like the blatant losses caused by companies such as Storm Financial, which could be seen coming for years before any action was taken.

Or doing the dirty work for industries such as the financial planning body who lobbied to ASIC to wipe out competitors like financial educators a decade ago, using draconian measures that are an abuse of its mandate.

ASIC now seems to be more about doing its job, whereas in the past it was largely about being seen to be doing its job.

It didnt care if someone was innocent or guilty; instead it was all about getting as many convictions as possible, to be seen as doing something.

Heavy-handed, unfair tactics discredit the regulator.

Especially when blatant, illegal activities happened in the market with ASIC failing to take action, which would have stopped billions being lost unnecessarily by investors.

Its good to see ASIC take action against the financial planning industry for their blatant abuse of consumers over the past several decades in their efforts to ban financial planning commissions; and for this they should be commended.

Their efforts to improve financial advertising standards are also a step in the right direction, if they arent overdone.

Ive said before, Financial regulation will only do so much.

Financial education is far more effective at protecting consumers than over regulation.

I mean take a look at things like the size of a prospectus now.

Over regulations have made the fine print expand to so many pages that no one bothers reading them. Which has decreased investor protection.

And its on that note Im proud to say Ill soon be announcing the launch of a brand new industry body for financial educators.

Its been designed to provide free financial education resources, push the importance of financial literacy and the financial education industry, and increase consumer protection within the industry with a free consumer complaints service.

Did you know: Across the ditch an equivalent of ASIC (the FSA) has been started?

However they want Australian financial educators to be licensed in NZ now too.

This is a bad move, one that will prevent NZ consumers from accessing a financial education and leave them at the mercy of the financial planning industry, which caused massive losses to NZ investors in recent years.

So much so that the NZ Government had to fork out $795 million to cover losses.

This is an example of over regulation having the opposite effect than intended.

Most Australian financial educators, who are already licensed in Australia and paying thousands in fees, simply wont invest in a NZ license for such a small domestic market.

We have recently written to the NZ FSA suggesting they consider financial educators licensed by ASIC in Australia be able to speak at events in NZ without having a dual license.

For Kiwis sake I hope so. Otherwise theyll all have to spend more on airfares to access leading edge financial strategies and education over here.

About the Author: Jamie McIntyre is the founder of the 21st Century Group of companies and CEO of 21st Century Education. He is also bestselling author, successful entrepreneur, investor, sought after success coach, internationally renowned speaker and world-leading educator.

jamiemcintyre.com

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