Australia's white-collar crime watchdog could be set for an overhaul with the release of the government's wide-ranging inquiry into the financial system.
The Australian Securities and Investments Commission - itself a product of a government review 17 years ago - has been agitating for tougher penalties for corporate criminals and a levy on industry bodies ahead of the inquiry's report, to be released today.
The agency - responsible for monitoring Australia's financial markets and corporations - has been battered by its mishandling of scandals at some of the country's biggest financial institutions, the Commonwealth Bank and Macquarie Group.
It has been dealt another blow in the form of budget cuts, with $120 million to be stripped from the agency over the next four years.
ASIC chairman Greg Medcraft has been calling for tougher penalties for white collar criminals in the lead-up to the inquiry, which is chaired by former Commonwealth Bank chief executive David Murray.
He has also been advocating for a user-pays system, which he claims will make industry players more accountable.
"We continue to push the case for a user-pays funding model for ASIC," he said in an annual report last month.
"Such a model is not about increasing ASIC's budget but about providing the economic incentives to drive the government's desired regulatory outcomes for the financial system."
But corporate law expert Juliette Overland at the University of Sydney said she did not expect it the inquiry to recommend big changes to penalties, mainly because the idea was unpopular and would not solve ASIC's problems.
"If you want to deter people in doing any sort of corporate crime, whether its insider trading or anything else, the biggest deterrent is thinking you're going to get caught," she said.
"Whether you go to jail for two years, five years or 10 years ... For most white-collar criminals, the worst thing that can happen is getting caught in the first place."
Changes to how ASIC polices corporate Australia will be decided as the plight of investors, caught up in a series of corporate collapse, comes to a head.
Victims of failed managed investment scheme Timbercorp made an emotional plea to ANZ last month, asking the bank not to recall loans that it and other banks financed before the scheme collapsed.
Investors in Great Southern, another failed managed investment scheme (MIS), are also facing bankruptcy and the potential loss of their homes if a settlement with Bendigo and Adelaide Bank - which will give them just $16 back for every $10,000 they invested - goes ahead.
These failures, and the financial planning scandals, will weigh heavily on the inquiry's report, Ms Overland said.
"Those issues - especially financial advice - have been very troubling to the community both in relation to ASIC's action and the fact that those types of things can and do happen."
A scathing Senate inquiry report into ASIC's handling of the Commonwealth Bank scandal in July made 68 recommendations. These included the introduction of a user-pays model, a review of civil and criminal penalties and an increase in ASIC's powers over financial planners to include the power to ban individuals on suspicion of "egregious misconduct".
The government has so far refused to respond to these recommendations, leaving them to the Murray inquiry.
The last inquiry into the financial system, the Wallis inquiry in 1997, resulted in the creation of ASIC, as well as its banking counterpart, the Australian Prudential Regulation Authority, which was spun out of the Reserve Bank.
The focus of the Murray inquiry is protecting Australia's economy and financial system from any future global financial shocks.
Ms Overland said while a user-pays model of regulation would be loathed by some in the industry, it was necessary to overcome ASIC's shortfalls.
"Something has to be done, with the cuts to ASIC's budget, so that it can still service all the areas it needs to oversee," she said.
