ASIC to embed staff within big four and AMP

In a joint announcement today (7 August), Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly O’Dwyer announced that the government would be pumping additional resources into the Australian Securities and Investments Commission (ASIC) to “ensure the corporate regulator has the resources and powers it needs to combat misconduct in the financial services industry and across all corporations for the protection of Australian consumers”.

The additional funding follows a decision by ASIC’s new chairman, James Shipton, to refocus ASIC’s strategic direction on proactive enforcement and increase onsite supervisory approaches and follows on from heightened scrutiny of how the sector runs, given the ongoing Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

Notably, the $70 million package will include $8 million for ASIC to embed dedicated staff within the big four banks (ANZ, CBA, NAB and Westpac) and AMP to “monitor governance and compliance actions”.

According to reports, Mr Shipton said that ASIC would have up to 20 officers embedded in the banks, who could spend several months in the institutions.

“They will be engaging at every single point in a financial institution,” Mr Shipton said.

“We will be going onsite. We will now have more physical presence. 

“We will have supervisory officers embedded for a significant period of time inside these large institutions because I know it makes a difference to the way that they behave. 

“I know it will make real positive outcomes when it comes to the way financial institutions target customers. And that should be fair.”

Other measures include:

• $26.2 million to “accelerate and increase the intensity of ASIC’s enforcement activities”, and enhance its capacity to pursue actions for serious misconduct against well-funded litigants, through the Enforcement Special Account.
• $9.4 million to boost supervision of the superannuation sector by strengthening audit and enforcement action to improve transparency and outcomes for superannuation members.
• $6.8 million to establish a dedicated taskforce which will conduct “a proactive, targeted and thematic review into corporate governance to identify and pursue failings in large listed companies”, including deploying staff to conduct new onsite surveillance and investigations.
• $6.6 million to implement the government’s reforms to whistleblower protection laws “so that ASIC can better receive, assess, triage and address whistleblower disclosures about misconduct”.
• $6 million to “promote Australia as a world leader in the development and adoption of regulatory technology solutions” for the financial services industry.

The remaining funds will be directed towards improving consumer access to the Financial Advisers Register, enhancing ASIC’s enforcement work on the unfair contract term protections for small businesses, and ensuring compliance by licensees and financial advisers with the Future of Financial Advice laws, the joint announcement said.

“This new funding will bolster ASIC’s enforcement capabilities and enable it to undertake new regulatory activities and investigations so as to better deliver on its mandate of combating misconduct in corporations and in the financial services industry,” the statement read.

“It also builds on the Turnbull government’s commitment to ensure ASIC is fit for purpose and can pursue and prosecute those who do the wrong thing.

“The Turnbull government is committed to ensuring ASIC is equipped with the resources and powers it needs to effectively detect, deter and punish those who do the wrong thing, to improve community confidence and outcomes for consumers and investors in the financial services and corporate sectors.”

The government ministers added that ASIC’s new deputy chairperson, Daniel Crennan QC, will also have a key focus on enforcement action.

[Related: Major banks used market power to ‘exploit’ customers: PC]