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ASIC request to embed staff at major banks approved

ASIC request to embed staff at major banks approved

Reporter

The federal government has confirmed it will provide ASIC with additional resources to further monitor the big four banks and AMP.

Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly O’Dwyer announced in a joint statement today that it would provide $70.1 million dedicated towards strengthening ASIC’s enforcement capabilities.

On 22 June, the corporate regulator’s chairman James Shipton said ASIC was engaging in “productive conversation[s]” with Treasury about a proposal to embed its staff in the major financial institutions.

According to the joint statement, Mr Morrison and Ms O’Dwyer confirmed $8 million of the new funding will go towards executing a “new supervisory approach” which would include embedding ASIC staff within NAB, ANZ, CBA, Westpac as well as AMP for the purposes of monitoring governance and compliance.

The rest of the funds will be allocated as follows:

  • $26.2 million to “accelerate and increase the intensity” of ASIC's current enforcement activities;
  • $9.4 million to increase supervision of the superannuation sector by strengthening audit and enforcement action;
  • $6.8 million towards a “dedicated taskforce” that would review corporate governance;
  • $6.6 million to implement the government’s whistleblower reforms;
  • $6 million towards “promot[ing] Australia as a world leader in the development and adoption of regulatory technology solutions for the financial services industry”; and
  • the remainder towards improving consumer access to the Financial Advisers Register.

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 statement said.

Government backs ASIC chairman James Shipton, says Treasurer

Speaking in Melbourne about the additional funding, Mr Morrison said that the new measures had been pitched to government by the corporate regulator.

"Today, we are announcing new arrangements, new resources, new support, to effectively back the plan of the new chair of ASIC, James Shipton, to get on with the job of ensuring that his organisation is right up to the mark. He has put this plan to us," Mr Morrison said.

"It has been carefully considered and calibrated to do the job that his experience and his officers' experiences, have taught them what they need to do. And the government today, with myself and Kelly and, of course, the Prime Minister and the entire cabinet, are backing in this plan to make the changes that enable them to get about the job."

Ms O'Dwyer said the new funding for ASIC came after Mr Shipton conducted a strategic review and said the regulator needed "better resources to be able to ensure that their supervisory approach can be much more part of the day-to-day activities of some of our biggest financial institutions".

"So, for the first time, we're going to see ASIC actually having ASIC people in our top four banks, our big banks, and also AMP, as our five biggest financial institutions in this country.

"That will mean that there is a greater ability for the regulator to be able to prevent misconduct," she said.

Mr Shipton, speaking alongside Mr Morrison and Ms O'Dwyer, said the new resources was "great news for ASIC" and meant representatives from the regulator would be "going onsite".

"We will now have more physical presence when it comes to financial institutions," Mr Shipton said.

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

The embedding of ASIC staff would have an impact on decision-making, he added.

"I know that it will make real, positive outcomes, when it comes to the way financial institutions should treat customers – and that should be fair."

In-house ASIC teams to start "very soon", says Shipton

The chair of the corporate regulator outlined that ASIC staff could be embedded in the major financial institutions as soon as within a few weeks' time.

"We will be initially starting, very soon, in the weeks ahead, with a particular focus on governance structures and a particular focus on breach reporting," Mr Shipton indicated.

This would involve a team from ASIC of "up to 20 people" temporarily based within the big banks.

"They will be spending significant amounts of time inside financial institutions. That may be days, may be weeks, may be months, depending on the project at hand, depending on the task at hand and depending on the harm that we're trying to solve for."

Furthermore, the ASIC agents would have free reign in engaging with staff "at every single point in a financial institution to provide that effective regulatory coverage".

"That could be the CEO, it could be the chair, all the way through to the men and women who are in the particular business unit. We will calibrate our response depending on the challenge at hand and the task that is before us," Mr Shipton said.

He urged banks to develop a strategy for "positive and productive engagement with regulatory agencies" to the end of creating a "positive culture" within financial entities.

 

ASIC request to embed staff at major banks approved
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