Appearing before the parliamentary joint committee on corporations and financial services on Friday, Joe Longo said while the 2018 inquiry had made a “significant contribution to the way we think about regulation in Australia”, it had perhaps been too simplistic in its findings around ASIC’s apparently soft-touch approach to enforcement.
“The ‘why not litigate’ mantra that came out of the royal commission was a useful approach to the question of enforcement, but to my mind no mantra is ever going to capture the subtlety of what we are talking about,” he said.
“The ASIC legislation is wide-ranging and we are never going to be able to investigate everything brought to our attention – case selection criteria, what we resource, what we investigate, those things require judgement.
“The concept Hayne came up with was useful, but we all need to be reminded that what we are talking about is active, targeted enforcement and that is what we are about.”
Off the back of spiralling supervisory levy costs, Mr Longo suggested ASIC would take a more selective approach to enforcement through the courts under his leadership.
“Not every matter is going to end up in court – there will be times where we won’t take action because the matter does not warrant it,” he said.
“For those of us who have been around a while, we know that launching court proceedings brings with it risk and cost, so part of the judgement that goes into launching proceedings is whether that is justified in all the circumstances.
“Occasionally we will settle matters, often those settlements will be court-based outcomes, and occasionally we may go back to EUs if that is in the public interest to do.”
Newly appointed ASIC deputy chair Sarah Court echoed Mr Longo’s statements, suggesting the regulator would aim for a middle-ground approach between ASIC’s pre and post-royal commission strategies.
“We’ve got the pre royal commission approach which Hayne took issue with in relation to the use of EUs, and then we’ve got the ‘why not litigate’ regime that’s been in place. My approach to litigation is it’s an important enforcement tool and it will remain so, but litigation is one of a number of tools you can use in a broader enforcement spread,” Ms Court said.
“We might use infringement notices or some of the other new powers ASIC has been given, we may go criminal or pursue civil litigation. We need to make a choice in that range that is an efficient and timely use of resources – yes we will continue to be in the courts, but I would also hope we can look flexibly at our other enforcement tools.”
