Banking Royal Commission: ASIC calls in legal help for crackdown
Australia’s corporate watchdog is hiring an army of lawyers for more than a dozen new investigations into banks as the royal commission wraps up. But experts warn it might not be enough.
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Australia’s corporate watchdog is hiring an army of lawyers in preparation for more than a dozen new investigations into major banks and financial advice providers as the royal commission wraps up.
With three weeks to go before Commissioner Kenneth Hayne hands down his final report into the sector, the Australian Securities and Investments Commission has revealed it already has 20 targets in sight for investigation and will be seeking an external legal team to help tackle the massive workload.
But financial law experts are questioning whether ASIC’s estimated outlay, between $1 million and $5 million, will be enough - particularly given the size of the banks’ war chests.
It comes after Commissioner Hayne slammed the watchdog in his interim report for not being tough enough on the financial sector, saying: “When misconduct was revealed, it either went unpunished or the consequences did not meet the seriousness of what had been done.”
The 18-month contract for a legal team is part of ASIC’s plan to “expand and accelerate” a crackdown on banks and other providers giving dodgy financial advice.
ASIC’s approach to market, released last week, says it intends to commence investigations into “a number of major Australian banks and large financial services licensees”.
“There are approximately 20 new investigations which have been, or shortly will, commence into these entities and for which ASIC will potentially require assistance from external solicitors,” the documents states.
Australian National University financial law expert Tracey Mylecharane, a former litigation lawyer, told News Corp the watchdog’s proposed outlay was “not sizeable”.
“$1 to $5 million for some complicated investigative work, in this climate, I would not have thought that is going to get you very far,” she said.
Ms Mylecharane noted there was an “extraordinary amount of work to be done” by ASIC.
She said it was difficult to evaluate whether $5 million would be enough but added: “My eyebrows are raised. I’m asking questions at that figure.”
Former ASIC senior lawyer Michael Duffy, now a business law expert with Monash University, said the proposed outlay “won’t go that far” given a good barrister could cost about $1000 an hour or if there was a protracted legal fight.
But Dr Duffy also defended ASIC after Commissioner Hayne savaged it for often seeking negotiated solutions with the banks, rarely heading to court, and imposing penalties that were “immaterial for the large banks.”
Dr Duffy said the commission was spending taxpayer dollars and needed to provide value for money, adding: “For ten negotiated solutions, it will cost you the same as one large court case that may or may not win.”
Consumer Action Law Centre director of policy and campaigning Katherine Temple said the watchdog needed to be properly resourced to “take on the big end of town”.
ASIC was unable to comment on the status of its investigations or who it was targeting but a spokeswoman told News Corp $1 to $5 million was an estimated amount only.
“The estimate is based on the foreseeable scope of the services, ASIC’s expertise to deliver the required services, previous similar services and market rates,” she said, adding that the amount could increase or decrease if there was a change in scope.
Originally published as Banking Royal Commission: ASIC calls in legal help for crackdown
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