Who is watching the watchdog? : a critical appraisal of ASIC's administrative powers

The Australian Securities and Investments Commission (ASIC) is empowered by the Corporations Act 2001 (Cth) and the Australian Securities and Investments Commission Act 2001 (Cth) to apply administrative sanctions which may significantly impact on companies and individuals. To safeguard the rule of law and to protect the regulated community from a potential exercise of arbitrary power, it will be argued that there must be adequate statutory safeguards to ensure regulators, such as ASIC, are made publicly accountable. Accordingly, careful monitoring is needed to ensure that sufficient legislative protections are available to promote accountability and are not sacrificed for administrative efficiency. ASIC’s power to issue infringement notices under Part 9.4AA of the Corporations Act 2001 (Cth) and to accept enforceable undertakings under ss 93AA and 93A of the Australian Securities and Investments Commission Act 2001 (Cth) are the administrative sanctions which are the central focus of this discussion. These administrative sanctions will be critically examined within the context of the availability of internal and external merits review, which will be used as the criteria to evaluate ASIC’s accountability. It will be concluded that the present legislative framework relating to these administrative sanctions is inadequate and that legislative reform is needed to make ASIC more accountable and thereby reduce the risk of it acting arbitrarily. For a public regulatory scheme to be effective there needs to be an appropriate balance between the competing public and private interests. The suggested legislative reforms proposed in this paper arguably achieve a fairer balance than the current scheme.