'Not a nickel and dime conversation': ASIC needs to be bigger, chief tells parliament
A bigger Australian Securities and Investments Commission will be better equipped to deal with banking misconduct driven in part by a lack of competition, the head of the corporate regulator says.
ASIC chairman James Shipton told Senate Estimates on Wednesday evening that ASIC needed to grow, not just in terms of funding but also in terms of capabilities.
“What we now need is a constructive conversation about the powers, positioning and right-sizing of ASIC,” Mr Shipton said.
Mr Shipton recently called on the government to pass legislation that would dramatically beef up the regulator's powers and the penalties that could be slapped on companies breaking the law.
Mr Shipton pointed to what he said were key observations of the corporate regulator in the interim report by the royal commission, a document that is scathing of ASIC’s enforcement record, about the lack of market deterrence in the banking sector.
“Those missing market deterrents are: the absence of meaningful competitive pressures; the absence of a fear of failure or collapse of the institution; and the absence of a fear of failure of individual financial transactions,” he said.
“There is a particular challenge that comes from the failure of the market deterrence in this country. Those market deterrents do not, unlike other places and other markets, provide a cleansing mechanism,” Mr Shipton said.
Mr Shipton said Australia’s superannuation system created a democratised financial system which gave banks greater power in the Australia market than the power held by banks operating in other markets.
“[This] heightens our responsibilities as a regulator but equally it heightens the responsibilities of financial institutions to live up to their part and to put it bluntly to live up to their basic legal obligations which they are not doing,” Mr Shipton said.
Mr Shipton did not lobby for a specific amount of additional funding, saying that was a matter for the government.
“This should not be a conversation about cents and dollars. This is not a nickel and dime conversation. This is a conversation about how can we have the most effective, the most robust, the most capable the most supported regulator that we can possibly can to meet the particular challenges that we face in Australia,” he said.
Last week ASIC tabled with parliament the terms of reference for a review of the regulator’s enforcement policies and procedures.
ASIC deputy chair Daniel Crennan told the hearing that ASIC had recruited an academic, a senior silk and a senior member of the Australian Federal Police to assist the regulator in its review.
He said he expected the review to be completed by Christmas.
“We will provide the royal commission with what we have recommended,” Mr Crennan said.
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