Australia's big four banks and biggest financial services firm are to find a regulator working on the inside in new enforcement measure.
Australia’s financial regulator, the Australian Securities and Investments Commission (ASIC), is to put agents inside the country’s five largest financial institutions to monitor business operations, as part of a A$70 million investment in the agency.
Financial Services Minister Kelly O'Dwyer and Treasurer Scott Morrison have said they will embed ASIC staff in the big 4 banks Commonwealth Bank, National Australia Bank, ANZ, Westpac and financial services company AMP. Ms O'Dwyer explained, ‘for the first time the Australian Securities and Investments Commission 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." She added, ‘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.’ The $70 million injection of funds more than doubles the $28 million reduction to ASIC funding over three-years in the last budget. Up to $8 million will be dedicated to putting full-time staff in the offices, who will report any breaches in day-to-day operations to the regulator. Ms O'Dwyer said, ‘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.’
Open to new ideas
The action follows revelations of systemic malpractice in the financial sector that have been aired in recent months before the banking royal commission, most notably the cases of AMP, which misled the regulator 20 times over ‘fees for no service,’ and, the Commonwealth Bank charging fees to dead people. ASIC’s new chairman, James Shipton, has told the banks to expect more time in the courtroom. Mr Shipton has issued a proactive enforcement order following criticisms the regulator had partnered with the institutions it was charged with policing. Reports revealed ASIC had only begun ten proceedings against the big banks since 2008. Last week the Productivity Commission recommended the government appoint an integrity officer in each of the banks that would bypass management and report directly to the chairman and the regulator. A statement from the Australian Bankers' Association chief executive Anna Bligh said the ABA is ‘open mind to new ideas’ but the recommendations should be looked at alongside the royal commission's findings, which are not due until February 2019. She added, ‘restoring trust and confidence in Australia’s banks through an open and transparent industry is the joint goal of Government, regulators and the sector.’