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The government has set aside $8m to implement what it calls a “new supervisory approach” over Australia’s big four banks and wealth manager AMP, by embedding ASIC staff to monitor such firms’ governance and compliance actions.
“[T]here are already people within the banks who report directly to the board, but what happens if the board doesn’t listen to them?” Treasurer Scott Morrison asked in a radio interview last week.
The funds are part of the larger $70.1m package channeled by the government to bolster the corporate regulator’s powers against misconduct in the financial industry.
In a joint media release, Morrison and Minister for Revenue Kelly O’Dwyer, said the funds would support ASIC “to better deliver on its mandate of combatting misconduct in corporations and in the financial services industry.”
The package also includes another $6.8m to establish a dedicated taskforce which will conduct a proactive, targeted, and thematic review into corporate governance to identify and pursue failings in large listed companies, including deploying staff to conduct new on-site surveillance and investigations.
According to Morrison, the $70.1m funding follows a decision by ASIC’s new Chairperson James Shipton to re-focus ASIC’s strategic direction on proactive enforcement and increase onsite supervisory approaches.
Meanwhile, a former chairperson of the ACCC has lashed out against the “ineffectiveness” of ASIC as a financial watchdog, amid reports of misconduct and a lack of competition in the banking sector. “This issue about ASIC ineffectiveness has been going for twenty five years and it's got no better over time, and the latest revelations just confirm that we have to do something more fundamental,” said former ACCC chair Allan Fels in an interview with ABC senior business correspondent Peter Ryan.
The Productivity Commission’s final report, released earlier this month, highlighted “opaque practices” in the banking industry that harm consumers. For example, it said the standard variable home loan interest rate advertised by ADIs bears no resemblance to the actual interest rates offered to potential borrowers, as the vast majority of consumers pay less than this rate.
