The Australian Securities and Investments Commission has justified its unwillingness to try to prosecute corporate criminals by insisting it must focus on the “efficiency and strength” of the financial system as well as its “fairness and integrity”.
Appearing at Senate estimates last night, new chair James Shipton and veteran commissioners like Peter Kell were questioned by Greens senator Peter Whish-Wilson about why the community perceived that ordinary criminals go to jail while corporate criminals get off lightly. According to ASIC chair James Shipton,
Our aim when we’re exercising discretion is ultimately to get to a point whereby Australians have confidence in the integrity, efficiency, strength and fairness of the financial system. And when we’re presented with misconduct we’re seeing very clearly in the royal commission we are exercising professional judgment, regulatory judgment in relation to the particular cases and the particular circumstances with the ultimate goal of that efficient, fair and strong financial system.
That is, fairness is only one of three goals for the corporate watchdog. The “tough cop on the beat” enforces laws with an eye on maintaining the strength and efficiency of industry, as much as deterring and punishing wrongdoing.
This perhaps accounts for why ASIC continues, inexplicably, to defend enforceable undertakings despite clear evidence that they do little or nothing to prevent misconduct. When asked by National senator John Williams what impact a 2006 undertaking had on AMP’s subsequent misconduct. “They can be very effective tool,” Kell replied, but admitted “it’s obviously been extremely disappointing to see the conduct of AMP in recent times … it’s difficult to imagine an EU from 12 years ago could have prevented some of those things.”
Earlier, in his opening statement, Shipton seemed to acknowledge that ASIC’s “current supervisory approach” wasn’t sufficient. It consisted, Shipton said, of “risk-based surveillance, or reviews, aimed at a particular firm, and thematic reviews aimed at a sector or subsector”.
While these approaches can be very effective, they can be less intrusive and are generally based on sampling. These techniques will continue to have an important role to play. Nevertheless, over the coming years, we will seek to improve our work by adopting new supervisory approaches for Australia’s largest financial institutions and important sectors. This will involve more intensive, day-to-day supervision, with better co-operation between our fellow regulators, especially with APRA. This approach will be more intrusive, enduring and, with onsite visits, more physical.
Remember that ASIC has known for years that its co-regulatory approach and industry surveillance was badly lacking, especially in the finance industry, described as a “target-rich environment” by ASIC back in 2014, when a Senate committee forensically dissected its inadequacies. That Shipton is only now flagging that “over the coming years” a more “intrusive” approach will be adopted augurs poorly for a significant improvement in the proactivity of ASIC. And its willingness to view fairness for consumers as just one item on a regulatory checklist doesn’t leave much hope that the fabled “tough cop on the beat” will appear any time soon.
Well I’m calling BS on all that. Makes my blood boil.
A strong finance sector is one that is strongly regulated and policed, where culprits know they will go to gaol and companies know they will get serious fines. That will result in a fair industry, a strong one, where market forces play their part in creating efficiency.
Allowing criminality to be waved through with enforceable undertakings means that companies that take short cuts, that don’t follow the rules, that screw their customers, will always be in front of those companies doing the right thing. That creates pressure on others to cut those same corners, or find new ones.
If they are going to have EU’s they should be Enforced Undertakings, not the weasel word enforceable (if we get around to it). They should be transparent, widely publicised at the companies expense by a strong regulator.
This mob aren’t just captured, they are tamed, bound, gagged and lobotomised.
Couldn’t think a more succinct account of why ASIC just has to be abolished. They still don’t get it. Propping up a corrupt industry isn’t in their mission statement (I hope)
Jesus wept. Absolutely applaud your self restraint Dog’s. Wherever one looks, governance, and departmental failures; unaccountable, unapproachable and bloody well uncommunicative. Connection to and with public, their clients, an anathema. The dictionary sums it up perfectly; “a detested person or thing.” As for a (sheriff) “ASIC” to whom we look for first order accountability . . . forget it! Even another Royal Commission would blanche at thought of “cleaning out” all government departmental service delivery failings . . .
I agree totally with Dog’s breakfast comments.
They need to be “enforced” undertakings, and penalties increase dramatically when failure to comply is detected.
ASIC needs to demonstrate its effectiveness asap, time for some heads to roll in the boardrooms of the financial sector… the worst and most senior offenders need to be in court and imprisoned if warranted.
“Our aim when we’re exercising discretion is ultimately to get to a point whereby Australians have confidence in the integrity, efficiency, strength and fairness of the financial system. And when the financial system continues to fail to reach that point – we like to continue to watch?”
ASIC – a toothless tiger with a gum problem. No more excuses.
We’ve seen this decline in morality in the financial services aided, abetted and even encouraged as the “regulated” have watched to see how much further they could ‘push the envelope’, as the watch dog sat there and did nothing to pull up such behaviour – restrained in no small measure by budget/resource cuts aimed at restricting the reach of it’s regulatory capability, by a government doing the bidding of those donors, and the regulator’s lap-dog mentality to pleasure their political masters before the public?
Surely anyone can see that Shipton is patently admitting that ASIC is incompetent. From the ASIC mission statement on the ASIC website:
The ASIC Act requires us to:
– maintain, facilitate and improve the performance of the financial system and entities in it
– promote confident and informed participation by investors and consumers in the financial system
– administer the law effectively and with minimal procedural requirements
– enforce and give effect to the law
– receive, process and store, efficiently and quickly, information that is given to us
make information about companies and other bodies available to the public as soon as practicable
– take whatever action we can, and which is necessary, to enforce and give effect to the law.
Clearly, ASIC is admitting that it refuses to discharge its statutory purpose. And the Hayne RC has illuminated the great harm that failure has caused Australian society. Therefore, ASIC must be dismantled and an effective regulator constituted in its stead. Hopefully that will be Hayne’s recommendation number 1.
If the government can create the Building Commission to enforce the law, overwhelmingly against unions, in the building industry then it can apply the same rigour to the thousands of criminals operating in the finance sector.