ASIC to embed officers into major banks following banking Royal Commission findings

Following the laying bare of financial services sector misconduct by the Royal Commission, on 7 August 2018, the Turnbull Government announced additional funding of $70.1 million to the Australian Securities and Investments Commission (ASIC). The additional funding is intended to assist the regulator to set a new strategic direction on proactive enforcement and increased onsite supervisory approaches1.

The package of measures included:

  •  $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;
  • $8 million to implement a new supervisory approach in respect of Australia’s five largest financial institutions (the big four banks and AMP) by, for the first time, embedding dedicated staff within these institutions to monitor governance and compliance actions;
  • $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 on-site 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; and
  • $6 million to promote Australia as a world leader in the development and adoption of regulatory technology solutions for the financial services industry2.

Much focus has centred on ASIC embedding its staff in the big four banks, including AMP, to directly monitor governance and compliance.

ASIC chairman, James Shipton, advised The World Today (ABC Radio Adelaide) “We’ll start with the leadership group, because the initial focus is going to be around governance structures, particularly reporting structures of misconduct and conduct that doesn’t meet community expectations.”3

Responding to the funding, the Australian Banking Association’s CEO, Anna Bligh, said restoring trust in the sector is a joint goal. “Banks will work proactively and in good faith with ASIC on the measures announced today to improve monitoring of regulation and increase the transparency of the financial services industry,” she said. “While the industry awaits further details of how the new initiatives will operate, it is committed to ensuring it is quickly and efficiently implemented.”4

[1] & [2]