The failures within the banking sector uncovered by the royal commission constitute a “great threat” to the financial system, says ASIC chairman James Shipton.
Speaking at the Australian Council of Superannuation Investors conference in Sydney yesterday, Mr Shipton was asked how seriously he was taking the threat to the financial system given the failures aired at the royal commission.
"I think the threat is great. As a former member of the finance profession – as a person who is proud to be a financier – I find it jarring and disappointing that these are the circumstances in which we find ourselves," he said.
"As a proud Australian who is returning from nearly 25 years overseas, it is very confronting that we find ourselves in this situation," Mr Shipton said.
The misconduct discussed at the royal commission "must not stand, [it] must be addressed", he said.
Mr Shipton also highlighted the "proliferation" of conflicts of interest in parts of the financial industry.
"It is clear to me that a number of institutions have not taken the management of conflicts of interest to heart," he said.
"This is verging on a systemic issue. Indeed, it is the source of much of the misconduct ASIC has been responding to and which is being highlighted by the royal commission hearings."
Mr Shipton expressed his "surprise" that many Australian firms have "turned a blind eye" to conflicts of interest as their businesses have grown.
"Too often, unacceptable conflicts were justified by firms on the basis that ‘everyone else is doing it’, even though it’s the right thing to do to end them.
"A business culture that is blind to conflicts of interest is a business culture that does not have the best interests of its customer in mind. Moreover, it is one that is not observing the spirit as well as the letter of the law," he said.
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