In short:
A Senate committee recommends ASIC be split up, to create a corporations regulator and a financial services regulator.
Key findings of the report include a "bad culture" at the corporate watchdog, and a sprawling bureaucracy that is unable to prosecute white-collar crime.
What's next?
Committee chair Andrew Bragg says its unlikely the recommendations will be adopted in this term of government.
The Australian Securities and Investment Commission (ASIC) is too focused on its own internal problems, too sprawling to carry out its duties under the law, and should be split into two separate regulators, according to a long-running Senate inquiry.
In its final report, the 20-month inquiry by the Senate Economics Committee found Australia's corporate and financial services regulator consistently fails to prosecute offenders, and it responds to most reports of alleged misconduct by taking no further action.
It found when the regulator did manage to take enforcement action, the civil penalties it imposed "were often at odds with the scale of the offending," and few criminal sanctions were ever achieved.
"While ASIC tries to deflect criticism that it is a weak corporate regulator by promoting its recent enforcement actions, the reality remains that corporate law is under-enforced in Australia," the report said.
The report recommends radical changes to make the regulator more responsive to the public and a tougher enforcer of the law.
It says ASIC should adopt an enforcement approach that prioritises the litigation of all serious instances of suspected breaches of corporate law.
"Too often, ASIC fails to respond to early warnings of corporate misconduct and does not routinely use the full extent of its powers to achieve strong enforcement outcomes," the report says.
"This approach fails to deliver justice to the victims of corporate crimes, undermines economic productivity and does not deter future poor behaviour," it says.
It says ASIC should be required to establish a searchable public register of civil or criminal outcomes that arise from reports it receives of alleged misconduct (with a record of how the regulator has handled those reports), similar to the approach taken by the US Consumer Financial Protection Bureau.
It also says whistleblowers should be encouraged to play a far greater role in Australian corporate society.
It recommends the whistleblower protection provisions in the Corporations Act 2001 be amended, and significant financial incentives should be offered to whistleblowers to encourage them to provide information about corporate misconduct.
The committee chair, Liberal senator Andrew Bragg, said he hoped this report would deliver lasting change.
"This is the third such inquiry into ASIC in the last 30 years, and if you read the transcripts of the last two, the one from the early 90s, and then the one from last decade, it's effectively identical," Senator Bragg said.
"I mean, nothing is really improved, despite all the inquiries and royal commission."
Split it up
The report partially blames ASIC's "sprawling ambit" as the reason why Australia's corporate regulations are so poorly applied.
It says the governments that have expanded the regulator's remit, since the regulator was founded in 1991, were the reason why its ambit had grown to be the "widest of any corporate regulator in the world".
ASIC's 200-strong workforce is responsible for regulating 95,000 entities that include companies, markets, financial services, consumer credit, and professionals who deal with financial products.
"I don't think that ASIC can actually focus, because its mandate is so big, and parliament has to take its medicine here," Senator Bragg said.
"Parliament has lobbed so many different things under ASIC over the last 20 years, so I think parliament can help fix this very bad situation."
ASIC should be split into a corporations regulator, and a financial conduct regulator, according to the report.
"No one expects ASIC to investigate all the reports it receives, or to get it right 100 per cent of the time. However, at present, ASIC does not appear to even be trying to improve its handling of misconduct reports," the report said.
The senator said having two bodies, responsible for specific areas of regulation, would address the problems stemming from ASIC being a "do everything" corporate watchdog.
"I would say central to this is the idea that when the agencies received a complaint, they do a proper investigation.
"And then they take the investigation through the prosecution."
University of Wollongong associate professor Andy Schmulow said a split would bring Australia in line with other major economies.
But he said any reform of its structure should be coupled with stronger objectives to prosecute crime independently.
"A reformed regulatory structure, whatever it may be, needs to stipulate in the legislation that these new regulators' task is to enforce the law and to preclude the government from interfering in the operation of that regulator.
"It's not the regulator's job to promote government policy. It's the regulator's job to enforce the law."
Whistleblowers should be better protected and paid
The report recognises the unique and powerful role of corporate whistleblowers in exposing illegal and unethical practices.
It recommends amending Australia's current whistleblower legislation to incentivise whistleblowers to come forward with information that would "significantly benefit the public", and compensate those who do speak out, or those "who are unable to make a disclosure in the public benefit without experiencing significant personal detriment, such as loss of career prospects".
Jeff Morris approached ASIC with information about the Commonwealth Bank of Australia that ultimately led to a royal commission, and said the regulator had failed to offer him any protections.
"They don't act on whistleblowers' information, ASIC is just a complete disappointment," he said.
Mr Morris said financial incentives and compensation for whistleblowers are needed under the law.
"People cheer whistleblowers, but they don't employ them when you go down that path, you'll never work again in your chosen field," he said.
"The retaliation that you suffer from the institution that you've exposed generally results in severe psychological harm, normally a diagnosis of PTSD, and also the disintegration and loss of your family.
"So whistleblowers pay a massive price to bring the truth out, and a little bit of compensation would not go astray."
Dr Schmulow said the present legislation amounted to a "bait and switch trick".
"You're told that there's whistleblower protection, and then anybody who tries to bring themselves under whistleblower protection is publicly crucified upside down so that all the other whistleblowers get the message: there will be no protection," he told the inquiry.
Organisation chart reboot
Senator Bragg said the new organisation should also adopt a more streamlined management structure.
"So they go for a statutory appointment approach still, but they have a CEO instead of having a full commission structure.
"One of the issues with having a whole bunch of commissioners is a lack of transparency and accountability."
In order to further boost transparency and public trust in its undertakings, the report recommends establishing a public register of investigations, prosecutions and outcomes.
"Unless you are showing that you are prepared to put heads on the spike, then you're not going to get any change in culture.
"And I think we need to have feared agencies so that people think twice when they want to do the wrong thing, so really supercharging, that enforcement piece is critical."
The report is scathing of ASIC's current management, frequently referring to the way its leadership structure promotes a lack of accountability to the public, and the reputational damage already done to the organisation by its opaque decision-making, and reporting processes.
"These issues have affected ASIC's leadership and undoubtedly damaged ASIC's standing in the community," the report said.
The report also calls for reforms to the regulators' funding, so more money "is directly resourced with the proceeds of regulatory fines, including late fees, court fines, penalties and infringement notices", and less funding comes from levies charged to industry sub-sectors.
In a written statement, ASIC said it would "take time to consider" the report's findings.
"Throughout the inquiry we have shared our strong enforcement record on behalf of Australian consumers and investors," the statement said.
"ASIC is in court almost every day pursuing wrongdoing and in the last 12 months alone launched around 180 new investigations.
"ASIC is already working with Treasury to act on the recommendations from the Financial Regulator Assessment Authority's review of ASIC's effectiveness."