Innovation in products and technology is a concern for regulators, according to Australian Securities and Investments Commission (ASIC) Chairman Greg Medcraft. 

“To meet these [challenges], we will need to be forward-looking and proactive,” he told the ASIC Annual Forum in Sydney. 

“This includes identifying potential risks over the horizon and maintaining a close dialogue with the industry to better understand what is happening in the market.”

Encouraging the financial services industry to think outside the box and use tools such as new media can lead to better outcomes, Mr Medcraft says.

“It’s important for regulators to keep adapting to new developments. Innovation is inevitable… we need to ensure it does not outpace regulation.”

ASIC also faces challenges from the globalisation of the financial services industry.

“We need to work towards global harmonisation of regulation. Global principles and a global rule book are a good starting point.”

Policymakers in different countries “take different approaches based in their domestic markets”, he says.

“Tools such as mutual recognition and substituted compliance can overcome these differences. They recognise that the same regulatory outcomes are being achieved, just in different ways.

“Equivalence of regulatory outcomes ensures regulation remains appropriate for each market while facilitating cross-border activity.”

Globalisation can aid misconduct, because people banned in one country can start again elsewhere due to a lack of enforcement protocols between regulators.

“Regulators will need to co-operate and help each other in investigations and enforcement matters,” Mr Medcraft said. “This is a real challenge.”