Banking News

ASIC Proposes Internal Supervisors for Big Four & AMP

(8 August 2018 – Australia) ASIC staff members will be embedded inside the Big Four majors and AMP to monitor compliance and corporate governance under a notably more proactive approach to enforcement being undertaken by ASIC chairman James Shipton.

The federal government has supported the move with A$70 million in additional funding including A$8 million over the next two years for the new supervisory approach involving dedicated staff assigned to monitor and report indiscretions in a more timely manner. The initiative placing ASIC supervisors internally within the Big Four banks and AMP suggests Mr Shipton plans to push ASIC towards operating in a similar style to the Australian Prudential Regulation Authority (APRA), which already has supervisors dedicated to particular institutions in order to identify issues before they become more severe.

The government's new funding increases ASIC's litigation budget by A$26.2 million to allow it to take more banks and other well-resourced litigants to court after appointing a second deputy chairman, Daniel Crennan, QC, to bolster the regulator's enforcement credentials. Mr Shipton wants to lift standards and culture in the banks to help restore trust, which has been negatively impacted by the royal commission into misconduct in the financial services industry and ASIC's own enforcement actions and tough rhetoric under former chairman Greg Medcraft. After the last round of the Hayne inquiry suggested ASIC had not been aggressive enough to ensure banks are compliant with the government's unfair contract terms (UCT) laws, more funding will also be given for this, and to improve consumer access to new register of financial advisers and to ensure licensees and financial advisers comply with the Future of Financial Advice (FOFA) laws. The new A$70.1 million is in addition to the A$121.3 million the government gave ASIC in 2016 to lift its investigative and surveillance capabilities, and will more than compensate for the reduction in the budget in ASIC's funding from A$346 million to A$320 million after several projects concluded.

"For the first time, ASIC will be funded to embed corporate cops directly within Australia's five largest financial institutions – the big four banks and AMP – to monitor governance and compliance actions," said the Minister for Revenue and Financial Services Kelly O'Dwyer. "It will ensure that ASIC is on the front foot when it comes to considering any deficiencies in the governance and compliance structures of these large financial institutions, so as to prevent harm to consumers before it occurs … These new resources will ensure that ASIC is the tough cop on the beat – the tough cop that all Australians need, and expect, ASIC to be."