Your money, our vigil says ASIC head

AUSTRALIA’S next top corporate cop says the financial services industry must serve the interests of the broader economy, and too many players have forgotten they are only stewards of other people’s money.

Incoming Australian Securities and Investments Commission chairman James Shipton says improving the conduct and culture of the financial services industry – along with public trust in it – will be his key focus.

“At the end of the day, financial markets, financial systems exist to serve the broader economy and the people who live in the community,” Mr Shipton told Business Daily.

“Financial institutions, big and small, are just stewards and guardians of other people’s money. That is something that needs to be reinforced and reminded.

“If there is a mindset in the financial market that they’re dealing with other people’s money, that financial markets require the trust of the community, then I think you can get change.”

Financial Services Minister Kelly O’Dwyer yesterday named Mr Shipton, a former Hong Kong-based financial regulator and Goldman Sachs banker, as the successor to Greg Medcraft.

He takes over the highprofile job at a time when the nation’s big four banks continue to face calls for a royal commission, and the biggest, the Commonwealth Bank, is battling money laundering allegations in the Federal Court.

Mr Shipton said poor conduct and culture within the financial services industry was an international problem and public trust had been missing since the Global Financial Crisis a decade ago.

“One of the reasons why I embarked on a change of career into financial regulation was because of this very challenge,” he said.

“I saw after the financial crisis that there was a trust deficit and a cultural challenge and I thought to myself, ‘something needs to be done’.”

Mr Shipton said regulators globally needed to be “very tactical and smart and strategic” in improving industry behaviour.

While he would not hesitate to use “hard enforcement” measures when warranted, he noted education, supervision, enhanced gatekeeping and better use of big data and analytics were all levers that needed to be pulled.

“A good regulator needs to be prepared to use hard enforcement tools, but equally a good regulator needs to know what other regulatory tools could be more effective and could have a broader impact,” he said.

Mr Shipton, the son of a former Liberal MP for the federal seat of Higgins, Roger Shipton, will start in February.

His appointment came after Credit Suisse’s chairman in Australia, John O’Sullivan – viewed as the favoured candidate for the job – pulled out of the race after coming under attack from Labor.

Mr Shipton, a lawyer by training, presently heads the Program on International Financial Systems at the prestigious Harvard Law School in the US.