Big banking groups are taking an average of 1500 days to internally identify breaches in conduct, ASIC chair James Shipton said in his address at the FSC Summit in Melbourne today.
And this is only the first step in the reporting the breach to ASIC, he said.
The findings are from an ASIC report to be released next month, one which probed breach reporting practices at about 12 big banking groups.
Reporting breaches is a statutory requirement, Shipton reminded the room.
"Accordingly, there is an urgent need for investment in systems, procedures and policies that better and more quickly identify emerging conduct and systemic issues so that they cannot only be reported to us more quickly, but so that can be resolved more quickly," he said.
"In my observation, there has not been enough investment in these systems and processes to date. With the result that it takes far too long for management to meaningfully address conduct problems."
Shipton suggested investment in regtech solutions as one way for senior management to invest in speeding up breach reporting.
Breaches reported to ASIC increased 30% in the last financial year.
"This suggests there is enhanced attention to these issues right now," he said.
"But there also needs to be supporting 'industrialisation' and 'institutionalisation' of these processes, to ensure management, and thus the institution itself, doesn't fall back into bad habits."
Shipton's speech also addressed trust deficit in the financial services industry.
"We must move from rhetoric to action, in addressing this trust deficit," he said.
Shipton targeted senior management in suggesting solutions to the trust deficit problem.
He said if the conflicts of interest (such as were highlighted at the Royal Commission) are embedded in remuneration, they will become embedded in the organisation's culture.
And shifting culture needs leadership involvement from the senior levels of the industry, he said. They must invest more in management systems, policies, and procedures.
Shipton mentioned regtech solutions as one of the ways to make this investment in management systems.This article was first published by: https://www.financialstandard.com.au/Author: KANIKA SOOD