ASIC has been talking a big game lately – so what
Michael Pascoe
30 November 2016
The Australian Securities and Investments Commission has been in the headlines a bit more than usual lately – not in a bad way – but it's fair to ask: so what?
ASIC chairman Greg Medcraft has been talking a tougher game with the banks on various fronts and announcing several compensation deals for aggrieved customers.
Yet we're still left with a story of the financial system's supposed watchdog asking the banks to check whether or not their staff have been ripping off any customers lately in the fashion made infamous by Wells Fargo in the US.
Wells Fargo frontline staff, under pressure from those at the top to meet cross-selling targets, had been opening accounts customers didn't want or need.
The whole question of a sales culture in banking is relevant here. It's been at the core of the local banks' main consumer scandals.
At the same time, there is something seriously wrong if ASIC has to tell the banks to audit their employees' behaviour.
If customers are being ripped off by being signed up for products they didn't want, you would think at least a couple would notice and tell ASIC.
If ASIC is so far removed from the consciousness of consumers, it has a problem.
And if a few customers have told ASIC there is a problem, you would think a regulator with fire in its belly and a desire to improve the world would already be knee-deep in its own investigation, elbows flaring, boots stomping and bank heads being banged together along the way.
It doesn't sound like it, but it never does. ASIC has a miserable track record for not grabbing the initiative when a whistle blower alerts it to a problem, or quickly jumping on the dodgy operators who regularly stick their heads up.
There's a tendency for the local watchdog to follow overseas leads – such as the Wells Fargo experience and the market rigging – rather than constantly being in the jungle hunting in its own right, setting traps, reviewing scat.
It's nice that the present chairman is talking tough but his predecessors did too, and had little to show for it at the end of their terms.
There's a question about ASIC's culture, as well as that of much of the finance sector.
At ASIC, it's the lingering question about fire-in-the-belly, or the lack thereof. No Elliott Ness has emerged from ASIC.
As for the banks, to get back to the audit question, there could be few greater condemnation of their culture if they need to be told to do such an audit.
Given past performance in this area, of the bosses not twigging to outperformance down the line, they probably do.