ASIC pledges to get tougher on banks

AUSTRALIA’S corporate regulator has admitted to mistakes by failing to even consider taking court action against Australia’s big banks over misconduct.

Some now face the possibility of court action as the Australian Securities and Investments Commission pledges to be a tougher corporate cop.

“Yes, there are case studies where, in my view, we should have, if the case was before us today, pursued criminal sanctions,” ASIC chairman James Shipton told the banking royal commission yesterday.

One of ASIC’s mistakes involved misleading ads about trauma coverage for heart attacks run by the Commonwealth Bank’s CommInsure business.

CommInsure faced up to $8 million in fines but walked away with a $300,000 community donation.

The royal commission heard CommInsure was uncomfortable about just making a community benefit payment without some sort of regulatory outcome.

“It looks like they are paying off ASIC to avoid action,” a CBA executive told the regulator in October 2017.

Mr Shipton said lessons from the CommInsure case included that it was wrong to negotiate the contents of a media release with the bank and that ASIC should have sought a stronger admission of wrongdoing from CBA.

ASIC only adopted a new approach that immediately considers litigation two or three weeks ago after being slammed by the royal commission for rarely going to court and letting much financial misconduct go unpunished.

All cases aired at the inquiry are being reviewed, including a criminal investigation into financial services company ClearView for making 300,000 unsolicited cold calls to sell life insurance, despite ASIC previously closing the case.

Another mistake was ASIC’s failure to consider taking action against CBA over the mis-selling of consumer credit insurance until now.

ASIC’s handling of home loan fraud connected to the National Australia Bank’s “introducer” program was also a mistake, with it only now look- ing at enforcement against NAB.

“Today these matters would be handled very differently,” Mr Shipton said. “I used the word mistake deliberately because mistake, in effect, constitutes a misguided decision.”

Senior counsel assisting the commission Rowena Orr, QC, questioned why ASIC had to get approval from the banks even for infringement notices.

“The parking inspector doesn’t seek an indication from the person he’s giving a parking fine to as to whether they will accept and pay it,” she said. action