We need more power: ASIC

The regulator also said it could use the enhanced powers to tackle serious problems that might otherwise linger while governments were legislating solutions.

“An additional example of delay is the time taken to address problems in the under-regulation of mortgage brokers, even after they became a prominent component of the home lending market,” it said.

“Problems were known and discussed for many years before reforms were developed and legislated in 2010.”

ASIC also called for the government to give it more flexible powers.

“A more flexible approach to the regulatory toolkit could avoid imposing regulation across all firms at all times in a one-size-fits-all system, but instead could be applied once significant market risks emerged in particular sectors and in response to market failures,” it said.

This is ASIC’s second submission to the Financial System Inquiry. The first submission in April also asked the government for new powers.

Meanwhile, ASIC has said that current disclosure regime is often counterproductive because the rules force financial services firms to give documents to consumers that are long and complex.

“In many cases, disclosure regulation has focused on what information about the product must be disclosed by issuers, rather than how the disclosure can help investors understand the product,” it said.

[Related: ASIC promotes financial literacy in schools]