The Australian Investments and Securities Commission (ASIC) has been asked to explain why it consults with lenders and other parties prior to publishing some media releases.
In front of a Senate Budget Estimates Hearing last Wednesday (31 May), ASIC deputy chair
Peter Kell responded to a question by Nationals senator John Williams around why the regulator’s media team shares information with those mentioned in select press releases.
“That’s like me preparing a media release to attack the Labor party and I ring up Mr Bill Shorten to say ‘Bill, are you happy with this?’” Williams said. “Why are you corresponding with the very people you’re putting out in the public arena for their wrongdoing?”
Kell said it was policy for ASIC to supply media releases in certain scenarios.
“We do provide for a short window in which to check media releases in relation to negotiated outcomes, not to court-based outcomes. It only occurs after the outcome has been decided and determined,” he told the hearing.
“Our primary aim in doing this is to ensure accuracy – so to allow checking of things like dates, the number of affected consumers, the amount of compensation that may have been paid.”
The focus on accuracy was very important, he added, pointing to a case in which the UK’s Financial Conduct Authority released erroneous information around one of their actions and wiped £2.4bn off the value of some UK insurers.
“With large entities, in particular if there’s a prospect at times of the action taken may have a material impact for negotiated outcomes, we allow a short window of up to 24 hours for checking the accuracy [of the media releases].”
Williams then asked about emails obtained under a freedom of information (FOI) request around an enforceable undertaking with Macquarie Bank in January 2013.
The emails were sent between Adrian Borchok, senior manager at ASIC, and other staff investigating Macquarie Bank’s wealth arm Macquarie Equities. In this correspondence, Borchok described this review as a “sham” and “superficial,” Williams said.
In response, Kell said there would always be differences of opinion which can be used to reach the proper outcomes for each individual case.
“I hope that you would understand and expect that within an agency such as ASIC there will be robust debate between officers about the best ways to deal with enforcement and regulatory matters.
“That is one of the ways that we ensure that our approach to getting the right sort of outcome is tested. There will be differences of opinion and there will be different views expressed.”
He also stressed that the enforceable undertaking achieved a positive outcome regardless of these differing views, with the business changing the way it operated, a number of advisors being banned, and over $20m in compensation paid out.
“There will inevitably be, along the way, arguments [and] disagreements around how to get to the right outcome. I think in that case, we clearly got to a very positive outcome for the consumers and for the bank.”
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