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James Shipton outlines ASIC’s new game plan
The Australian 12:00am September 8, 2018
Ben Butler
New probes of corporate governance at the big end of town, cryptocurrencies and the risks of climate change are among priorities set out by new Australian Securities & Investments Commission chairman James Shipton in his first corporate plan.
Also on Mr Shipton’s hit list are insolvency practitioners, grandfathered commissions, superannuation and investment products, as well as consumer finance issues including buy-now-pay-later schemes.
The new projects add to ones under way covering everything from insurance sales practices.
“Corporate Australia needs to build trust among the broader community,” he said in an introduction to ASIC’s new corporate plan, released yesterday.
“The financial sector is facing unprecedented scrutiny.”
He said the banking royal commission, which resumes hearings on Monday, “highlighted the harms that unlawful and unethical conduct can inflict on consumers and investors”. He said: “As a starting point to establishing trust, individuals, firms and industry need to improve their conduct by demonstrating greater levels of professionalism.”
While public outcry over banking scandals and other corporate wrongdoing has damaged ASIC’s reputation, the regulator has also benefited from the crisis through a cash injection and beefed-up powers.
Mr Shipton said ASIC welcomed an extra $33 million in enforcement and supervision funding from the government and looked forward to proposed new powers that include the ability to act against individual executives and stronger criminal and civil penalties for breaking the law.
New projects announced by ASIC as part of the corporate plan include a dedicated corporate governance taskforce “to conduct a review to identify and pursue corporate governance failings in large listed companies”.
ASIC is also planning to muscle in on the territory of sister regulator the Australian Prudential Regulation Authority by taking a close look at conflicts of interest in financial advice given to members of big super funds across both the retail and industry sectors and “boosting supervision of the superannuation sector by strengthening audit and enforcement action to improve transparency and outcomes for superannuation members”.
It plans to analyse “conflicted payments” in financial advice, including grandfathered commissions that have persisted despite a ban on new such payments in 2013, and test whether the industry is telling the truth about fees it charges.
Shonky companies may also find it harder to list on the exchange, with potential listings focused on operations in emerging markets and pre-sales practices for small IPOs to be investigated.
The scam and fraud-ridden cryptocurrency market is also to be probed, with ASIC pledging to monitor initial coin offerings and intervene “where there is poor behaviour and potential harm to consumers and investors”.
As part of a renewed focus on insolvency practitioners, the regulator plans to overhaul the assetless administration fund, which pays for investigations by liquidators of companies when there is nothing left in the corporate kitty but ASIC feels a probe is in the public interest. It said it will use the fund to set up a panel of liquidators that will “target facilitation of illegal phoenix behaviour by registered liquidators”.
ASIC is to overhaul responsible lending guidance in a report on standards due out by the middle of next year and plans a project to collect data on home loans.
In another new project, it will take on buy-now-pay-later products, such as tech darling AfterPay.
ASIC will be “reviewing industry structure, dynamics, composition and potential issues — eg size, consumer demographics and potential harms,” it said.