'With less resources, we need to be more careful and smarter and even better at selecting the right matters to pursue': ASIC chief Greg Medcraft. Photo: Michel O'Sullivan
The corporate watchdog could cease to become a "proactive" regulator under Abbott government cuts to funding.
Greg Medcraft, chairman of the Australian Securities and Investments Commission, said his organisation would be forced to rely more heavily on whistleblowers, members of the public and industry professionals to come forward with information on big business, saying the cuts, outlined in the federal budget, would limit its ability to watch over corporations.
"What it means is that we don't have the luxury of doing as much proactive surveillance," he said.
"On reactive surveillance – where someone comes to us and says, 'we've seen a problem' – that is something we will continue to take action on.
"That doesn't mean we will pursue everything, because clearly, with less resources, we need to be more careful and smarter and even better at selecting the right matters to pursue."
Mr Medcraft said it was up to government to determine how strongly it wanted the market to be monitored.
"You can have an ASIC at $200 million, $300 million, $400 million. It's up to government to determine what level of resilience they want in financial systems. And we will do our best with that money," he said.
"That intelligence that we get from complainants, like whistleblowers becomes more important."
Mr Medcraft also defended his organisation against claims it failed to monitor the Commonwealth Bank financial planner scandal.
He said it was the bank's fault that it had breached an enforceable undertaking agreement with the regulator, which led to a Senate inquiry being given false information.
"I was not happy about this [new] disclosure. Not happy at all. I was angry at this disclosure, frankly," he said.
However, he dismissed the suggestion that the enforceable undertaking system had failed and the regulator should have done more.
"EUs work very well, they avoid us spending years and millions in court to get an outcome we may not get an outcome."
"But they've got to be implemented in a thorough fashion."
"Frankly, we've learnt from this."
In a speech to a Stockbrokers Australia conference, he warned industry that it was monitoring high frequency trading and market manipulation.
"Markets do not simply exist – and will not exist – in the longer term, if they are simply feeding on themselves," he warned.
"They're not sustainable if it's just a casino," he said.