Hayne doubts over ASIC powers
Watchdog slammed over greedy banks
AUSTRALIA’S c or porate watchdog may be incapable of repairing itself, according to the former High Court judge overseeing the banking royal commission.
Kenneth Hayne has questioned whether the regulator, the Australian Securities and Investments Commission, has the capacity to protect consumers from “greedy” banks.
In his scathing interim report, Mr Hayne has said ASIC is taking on a more robust approach to enforcing laws.
But he said he was not convinced it could do the required job.
“As the commission’s work has continued, there are signs that ASIC may be seeking to alter its approach to enforcement,” Mr Hayne said.
“Even so, I remain to be persuaded that it can and will make the necessary changes.”
The report, released yesterday afternoon, covered the first four rounds of public hearings, which took place between March and July.
It made no detailed recommendations but it raised many questions that Mr Hayne believes need to be answered in order to clean up the financial system. His final report is due in February.
In a statement, ASIC chairman James Shipton noted the report’s “serious and important observations of ASIC’s role as a regulator”.
“ASIC will carefully consider these observations,” Mr Shipton said, as he pledged to keep assisting the commission.
The banking sector was contrite, with Australian Banking Association chief Anna Bligh saying the interim report “marks a day of shame for Australia’s banks.”
National Australia Bank chief Andrew Thorburn said it was difficult to face up to accusations the industry had put “profits before people”.
ANZ chief Shayne Elliott said the bank would continue to take “urgent” action to “fix the significant failures highlighted by the commission”.
Commonwealth Bank chief Matt Comyn said the report was “confronting”, especially the criticisms of the nation’s biggest lender.
Consumer Action Law Centre chief Gerard Brody said the report presented a unique opportunity for the Federal Government to commit to swift reforms that put Australians first.
“Banks and other financial service providers must be accountable to their customers,” he said.
In the report, Mr Hayne noted AMP may have broken criminal law in misleading ASIC about a scandal in which the company charged customers for services it did not provide.
But that matter was “now under active consideration by ASIC”, Mr Hayne said, so he would leave it with the regulator.
Mr Hayne said ASIC consistently responded to misconduct by seeking to resolve its concerns through agreements with financial institutions rather than prosecution.
“This cannot be the starting point for a conduct regulator,” Mr Hayne said.
“When contravening conduct comes to its attention, the regulator must always ask whether it can make a case that there has been a breach and, if it can, then ask why it would not be in the public interest to bring proceedings to penalise the breach.”