The corporate regulator has come in for heavy criticism in the Hayne royal commission's interim report which describes a weak watchdog that is too close to the banking sector and reluctant to act on misbehaviour.
It says that the Australian Securities and Investments Commission (ASIC) reluctance to prosecute banks for breaching their requirement to tell the regulator of their unlawful behaviour in 10 business days has helped to fuel the misconduct by the banks.
“Entities appear to have treated the law as applying only when and if they chose to obey it,” Commissioner Hayne says in his report which covered hearings into consumer credit, financial planning, small business and lending to farmers and indigenous people.
“When ASIC has sought to negotiate outcomes with entities, the negotiations have taken far too long.
"Too often, I suspect, ASIC has sought to accommodate the expressed wishes of the entity rather than determine what ASIC wants from the negotiation, tell the entity what it wants and insist upon it being provided promptly.”
Commissioner Hayne also took aim at the lack of action by both ASIC and the Australian Prudential Regulatory Authority.
“The conduct regulator, ASIC, rarely went to court to seek public denunciation of and punishment for misconduct. The prudential regulator, APRA, never went to court,” he said.
"The conduct regulator, ASIC, rarely went to court to seek public denunciation of and punishment for misconduct".
He also slammed ASIC for never taking action against a financial services licencee for failing to comply with the ten day time limit for breach reporting under Section 912D of the Corporations Act – a section that can carry criminal charges.
The lack of action was despite ASIC telling the commission that it believes this law was regularly broken by the big banks.
ASIC had also never sought to have breaches of the ASIC Act criminally prosecuted that relate to “accepting payment for financial services when the payee does not intend to, or there are reasonable grounds to believe it cannot, supply the service.”
ASIC commissioner James Shipton said the regulator welcomed the report and noted its “serious and important observations of ASIC’s role as a regulator”.This article was first published by https://www.smh.com.au/
Author: Sarah Danckert