The Commonwealth Bank will be the first major bank to have ASIC staff embedded into the organisation to investigate misconduct.
ASIC announced in August plans to place supervisors inside some of the largest financial institutions in Australia with Commonwealth Bank being the first.
Senior staff from ASIC will start working inside Commonwealth Bank as of today as part of their broader plan to stamp out misconduct in the big four banks and AMP.
The Commonwealth Bank said that it looked forward to working with ASIC to implement the program.
“As we have previously indicated, we welcome this move by ASIC as a positive and constructive step forward in the regulatory oversight of the banking industry. We look forward to working closely with ASIC to help produce the best outcomes for all of our stakeholders.”
ASIC chairman James Shipton told Senate Estimates that the initiative to embed staff in institutions would hopefully help to change company culture.
“We have an onsite supervisory program, which is the first of its kind in Australia, that is a new strategic initiative that we can [use to] build and characterise change,” he said.
ASIC was granted a $70 million funding boost by the Coalition government to implement the program, but Mr Shipton told the committee it was not about the money.
“This is not a nickel and dime conversation. This is a conversation about how can we have the most effective, the most robust, the most capable regulator that we can have to meet the particular challenges that we face in Australia,” he said.
Mr Shipton also called on the government to help beef up ASIC by passing legislation that would increase penalties on companies.
“It is vital that the increased penalties and regulatory powers – product intervention powers, design and distribution obligations, as well as a directions power – pass the parliament as soon as possible,” he said.
The goals of the supervisor program were laid out by ASIC commissioner John Price in September this year.
Mr Price said that the funding would strengthen ASIC’s vision for a fair financial system; part of that was to implement the supervisory program.
“A key goal of this new approach is to modify the behaviour of the large institutions to further encourage them to place consumers first in their decision-making and quickly identify and respond to conduct that produces unfair outcomes,” he said.
Mr Price said the focus would be on breach reporting but also to assess internal governance and key decision-makers within the businesses.
“We expect that the first focus area for on-site supervisory visits will be breach reporting by large institutions.
“Future areas of focus will be selected based on the potential for consumer harm, as well as other factors such as the suitability for intervention through on-site supervision, the prioritisation of issues by the relevant stakeholder team(s) and issues identified/resolved in other jurisdictions,” he said.