John Price, speaking at the Governance Institute’s Governance and Risk Management Forum, said that ASIC would do what it can, but the primary obligation to address issues raised by the royal commission lies in the regulated firms.
“As a starting point to establishing trust, individuals, firms and industry need to improve their conduct,” he said.
Firms needed to support better conduct, cultural change and better governance, Mr Price said, and that was something ASIC couldn’t do.
“ASIC cannot regulate culture, that is largely matter for boards and management. However, we have been emphasising the importance of fairness in a firm’s culture,” he said.
What ASIC could do was enhance its enforcement and supervisory approach, and Mr Price reiterated the new stance of ASIC was a “why not” attitude.
“We are significantly increasing and accelerating court-based enforcement outcomes driven by our new enforcement strategy, a ‘why not litigate?’ stance, and we are looking to use the full extent of our new penalties and powers,” Mr Price said.
This was different from a “litigate everything strategy”, Mr Price said; instead it meant that the commission would approach breaches and ask, “why not litigate?”.
“A ‘why not litigate?’ approach does not mean that enforcement action will become the sole item in our regulatory toolkit. But it does mean we have adopted a rigorous approach to deciding which tool is the right one,” he said.
Already there has been a 15 per cent increase in enforcement investigations and a 65 per cent increase in investigations involving large firms.
New initiatives including ASIC’s close and continuous monitoring work in large institutions and the governance taskforce helped the commission to detect cultural failings that lead to breaches.
“Under our close and continuous monitoring program, we have already conducted around 200 onsite interviews with banking staff at all levels to gain firsthand insights into systems, practices and culture,” Mr Price said.
Lastly, ASIC is working with the government to implement the new package of reforms, Mr Price added, including the role of the commission as a conduct regulator.
“These reforms are an implicit recognition that, in some cases, disclosure is not an adequate answer to consumer protection.
“It places the onus on product issuers to take a more ‘customer-focused approach’, something that has been lacking in parts of the financial services industry.”
