- The Banking Royal Commission brought to the fore ASIC’s failure to take appropriate enforcement action.
- A number of statutory and fiscal measures have now been introduced or announced, which are designed to bolster ASIC’s ability to take appropriate action against misconduct.
- A cultural shift is also underway within ASIC, with a strong emphasis now being placed on court-based enforcement action.
Even for agencies accustomed to public and political scrutiny, it is difficult to remember a time when Australia’s financial regulators have faced so much criticism. In highlighting breaches of existing norms and laws by financial entities, the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (‘Royal Commission’) focused attention on how the Australian Securities and Investments Commission (‘ASIC’) and the Australian Prudential Regulation Authority have failed to prevent and deter such misconduct.
As the financial services conduct regulator, ASIC’s enforcement culture received particular attention. In both his Interim and Final Reports, Commissioner Hayne criticised ASIC’s approach of seeking to resolve matters by agreement, saying it created the perception that compliance with the law is voluntary, when clearly it is not. Following the release of the Interim Report, ASIC committed to changing its enforcement culture. The starting point is now: ‘Why not litigate?’. ASIC has also recently undertaken a review of its enforcement policies, processes and decision-making procedures, and it has committed to establishing an Office of Enforcement. Whilst some might consider these changes to be merely cosmetic, there are reasons to suggest that a new enforcement landscape is now emerging.