ASIC’s boss denies being too friendly with the big banks and financial institutions or failing to investigate them for misconduct.
Chair James Shipton accepts the corporate regulator needs to up the ante, after being slammed by the banking royal commission for letting much of the widespread misconduct in the financial sector go unpunished.
But Mr Shipton argues the n Securities and Investments Commission lacks the resources it needs to do its job properly.
Asked if ASIC has failed to commence formal investigations against large financial institutions when it should have, Mr Shipton took issue with the word fail.
He said ASIC only has 240 enforcement staff – the ACT has nearly three times that number of sworn police officers – to deal with 12,000 complaints and 2000 breach reports by financial services licensees each year.
“We have to make real-time decisions as to which matters we can investigate,” Mr Shipton told the royal commission on Thursday.
“I would not consider the very difficult real-time choices and very hard choices as a failure.”
Mr Shipton described his regular contact with bank CEOs and boards, and that of other ASIC commissioners, as forming part of professional working relationships.
Mr Shipton, ASIC’s chair since January, said there were also formal meetings, dismissing a description that they were get-togethers.
He agreed there were risks with frequent personal contact between regulators and the leaders of the entities they regulate.
“That is why I personally exercise the highest degree I can possibly apply of professional judgment when I have these interactions, when I have these meetings,” he said.
One of the risks was the contact could be seen by the other side as too familial, friendly and social, he said.
He has called CEOs of companies regulated by ASIC to express his dissatisfaction about issues including legal trench warfare, a lack of professionalism in the n financial sector.
“I have also spoken to these leaders, to a man and a woman, about the fact that I believe that they have forgotten that they are dealing with other people’s money.”
ASIC now has a wider regulatory remit than comparable market conduct regulators overseas, but its staff numbers and budgets have only increased modestly, the inquiry heard.
Mr Shipton said ASIC was under-resourced and therefore restricted in its ability to pursue matters the way it wanted.
“We are constrained in probably every aspect of our regulatory work.
“It’s certainly in investigations, certainly in matters relating to enforcement, but I would also make the case that we are constrained in our surveillance, our supervision, our important work on financial capability, and other work that we undertake.”
Mr Shipton agreed ASIC needed to take more enforcement action over misconduct, including through the courts, and be quicker and more robust.
He said ASIC also recognised that in the case of a number of financial institutions, its previous tactics have not been as successful as hoped.
“Therefore we need to up our ante and be more agile in the deployment of that enforcement tool.”