Canberra on Tuesday granted new powers to the Australian Securities and Investments Commission (ASIC), the country's corporate regulator, as part of crackdown on white-collar crime.
Supervisors from ASIC will be stationed inside Australia’s biggest financial institutions under a two-year $70.1 million plan to directly monitor governance and compliance.
The corporate regulator will position supervisors inside the "big four" banks — ANZ, Westpac, Commonwealth Bank and National Australia Bank – and scandal-ridden wealth manager AMP Capital. All “big four” banks which dominate the local market, accounting for 80 percent of gross loans, have faced misconduct allegations including risky financial advice, dodgy mortgages, rate-rigging lawsuits and alleged breaches of anti money laundering laws. AMP stands accused of charging fees for no service and lying to ASIC.
The corporate regulator will also build a team to identify and pursue failings in large listed companies and conduct on-site surveillance and investigations of those companies.
ASIC new chairman James Shipton, who took the reins of the corporate watchdog in February, in his first major broadcast interview, told The World Today that enforcement staff could be embedded in banks by the end of the month and might begin in the chief executive's office.
"We're going to start with headquarters. We'll start with the leadership group, because the initial focus is going to be around governance structures, particularly reporting structures of misconduct and conduct that doesn't meet community expectations," Shipton said.
The new federal government funding was announced by the financial services minister, Kelly O’Dwyer, and the treasurer, Scott Morrison.
“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,” O’Dwyer said. “The package will allow ASIC to better combat corporate misconduct and misconduct in the financial services industry like never before.”
Morrison said the expanded ASIC powers will bring the watchdog in line with its peers in Britain, Hong Kong and the United States.
“Having ASIC embedded in these financial institutions ... brings us into line with regulators overseas,” he told reporters. He also said the banks and financial services companies were on board with the changes."They want these things to be fixed too," Morrison told 3AW radio.
The government said the $70.1 million package announced today would build on the extra $121.3m promised to ASIC in 2016 to bolster its investigative and surveillance capabilities.
The new package includes:
- $26.2m to help Asic pursue actions for serious misconduct against well-funded litigants.
- $8m to embed enforcement staff into the major banks and AMP
- $6.8m for a special taskforce to identify and pursue failings in large listed companies where ASIC staff could be deployed to investigate potential misconduct.
- $6.6m to address whistleblowers who call out unlawful and unethical behaviour in the financial services sector
ASIC also would increase its scrutiny of the A$2.6 trillion retirement funds sector, called superannuation in Australia.
The financial services sector is the largest contributor to the Australian economy and
Australia's banks are among the most profitable in the world.
In February, the Royal Commission into Misconduct in the Banking, Superannuation
and Financial Services Industry started investigating alleged and established misconduct in the sector.
Since then investors have wiped more than A$26 billion off the combined values of the “big four”.
In June, Commonwealth Bank, Australia's largest lender, was hit with the biggest corporate fine in the country's history for failing to report to authorities on time more than 53,000 suspicious transactions using its ATM.
The bank will have to pay $700 million Australian dollars ($534 million) according to Austrac, a regulator that focuses on financial crime.
It's a thorny road to restore public confidence in the country's financial sector. What about the other parts of the world?