House of Representatives Economics Committee: Opening statement by ASIC Chair, James Shipton - 22 June 2018

Opening statement by James Shipton, Chair, Australian Securities and Investments Commission, House of Representatives Economics Committee, 22 June 2018

Good morning Chair.

I am pleased to appear before the Committee today along with Deputy Chair Peter Kell and commissioners:

  • Cathie Armour; and
  • John Price.

Also appearing are Senior Executive Leaders:

  • Warren Day
  • Jane Eccleston
  • Greg Kirk
  • Louise Macaulay
  • Tim Mullaly, and
  • Michael Saadat. 

Chair, I would like to acknowledge the work of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry. 

I expect the Committee to have questions about issues raised at the Royal Commission hearings, including matters derived from ASIC’s work and investigations.

I want to highlight that the Royal Commission is yet to make findings or recommendations, and so I am mindful that ASIC should not comment or speculate on what the Royal Commission might either find or recommend.

Moreover, ASIC has a number of ongoing investigations related to issues covered by the Royal Commission. Accordingly, there are limits to what we can publicly disclose about them today.

We do, however, appreciate the opportunity to speak about the public outcomes ASIC has already achieved in matters that are the subject of Royal Commission hearings.

Accordingly, with your permission, I seek to table a folder of public statements and reports by ASIC that relate to matters which have been raised by the Royal Commission as case studies.

I also table, for broader context, information on ASIC’s total enforcement outcomes. 

Chair, I believe this document shows ASIC has a strong enforcement record and shows our utilisation of that important regulatory tool. Since 2011, we have:

  • obtained 160 criminal convictions - 19 this financial year.
  • completed 140 civil penalty proceedings - 24 this financial year;
  • banned 800+ people from providing financial services or credit;
  • banned 390+ people from being directors;
  • And importantly for Australians, we have recovered more than $320 million in compensation for consumers so far this year and nearly $1.8 billion since 2011.

Chair, ASIC works within a defined legislative framework set by Parliament and we use every regulatory tool available to us within that framework - whether that is litigation, bans, removal of licences, infringement notices, court enforceable undertakings, guidance notes, reports, interventions and so on. 

We welcome the Government’s April announcement about the recommendations of the Taskforce that reviewed ASIC’s Enforcement Powers. And we look forward to the strengthening and expansion of this legislative framework soon. The changes proposed include: 

  • Significantly stronger and clearer rules about the obligation of licensees to report breaches to ASIC honestly and in a timely manner. 
  • A stronger ability for ASIC to take regulatory action against senior managers or controllers of financial services businesses. 
  • A new ‘directions power’, that will enable ASIC to direct licensees to undertake remedial actions such as consumer compensation programs.
  • Stronger penalties against licensees in breach. For example, section 912A of the Corporations Act, that requires firms to deliver financial services ‘efficiently, honestly and fairly’ does not currently incur a criminal or civil penalty. It would under proposed reforms.

Once implemented, these changes will assist ASIC in achieving its vision of a fair, strong and efficient financial system for all Australians.

Thank you Chair. We look forward to your and the Committee’s questions.

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Last updated: 22/06/2018 08:51