The royal commission was supposed to be a “Come to Jesus” moment for ASIC, which was lashed by Kenneth Hayne for being ineffectual and over-reliant on heavily negotiated enforceable undertakings that had done little to stymie wrongdoing in Australia’s financial services.
But in the years since the royal commission, it seems little has changed.
The regulator’s investigative abilities seem seriously deficient, with many of its more significant wins coming from cases where the royal commission had already done a substantial amount of legwork. Its losses have been devastating, with a number of senior economic and political figures having to step in to prevent the regulator from appealing the infamous “Wagyu and Shiraz” responsible lending case a second time. And while public opinion on that case remains mixed, it was meant to be a serious test of ASIC’s brand spanking new “Why not litigate?” approach – a test that failed miserably.
Meanwhile, AUSTRAC has delivered billions in penalties and promoted sweeping change as the big banks are forced to clean out their risk management departments and invest heavily in technology.
Freedom of information requests filed by InvestorDaily sister brand ifa also exposed an overly bureaucratic organisation, with dozens of revisions and multiple staff members and departments required for the drafting of a written response to Labor senator Deborah O’Neill, who had written to ASIC demanding an investigation into the conduct of AMP – a written response that saw chair Mr Shipton admit that ASIC was limited in its ability to act.
And a glance at ASIC’s senior leadership structure will reveal a bad case of “too many cooks” for anybody with even a passing interest in its governance.
The case also shows how out of touch ASIC is with the matters it investigates, and the manner in which it investigates them. In correspondence to Mr Shipton, Treasurer Josh Frydenberg noted ASIC’s desire to initiate the recommended independent review on its own behalf, but noted that it would be “more appropriate” if Treasury were to carry it out. Whether that review was to be carried out by a team within ASIC itself or another in a long line of pricey consultants is a moot point; ASIC didn’t understand the severity of the issue, or the trouble it was in with a government that is now in a position of having to prove it takes corruption seriously.
Or, as Liberal MP Andrew Bragg put it: “Time for a clean out at ASIC. Too many commissioners. It’s unclear who does what. Not enough follow through on enforcement. Too many behinds and no goals.”
