Banking royal commission: ASIC chairman James Shipton admits to ‘mistakes’ amid fiery exchanges

The top corporate cop has made a number of shocking admissions about its dealings with the banks under unrelenting grilling.

The corporate regulator has made shocking admissions about allowing Commonwealth Bank to help draft a media release and engaging with National Australia Bank on a potential case settlement.

In an unprecedented attack on the workings of the Australian Securities & Investments Commission, chairman James Shipton admitted practices were “mistakes” and the regulator had an “over-reliance” on infringement notices and enforceable undertakings.

Senior counsel assisting Rowena Orr QC was unrelenting in her questioning of ASIC’s cordial dealings with the banks contrasting it with the behaviour of parking inspectors who normally don’t ask car owners whether they agreed to a ticket.

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“The parking inspector doesn’t seek an indication from the person he’s giving a parking fine to as to whether they will accept and pay it. Why don’t you just do that?”

Mr Shipton replied: “if there is an unwillingness to accept an infringement notice we would go straight to court.”

The commission saw various tendered emails including one in which ASIC staff flagged that CommInsure was concerned about the perception that a community benefit payment would indicate that CBA was paying off the regulator. An email from ASIC Commissioner Cathie

Senior counsel assisting Rowena Orr QC was unrelenting in her questioning of ASIC chairman James Shipton.

Armour to NAB’s risk boss David Gall also came under heavy questioning for her engagement on a potential settlement regarding inadequacies in its foreign exchange unit.

Ms Orr was strident in continuing to ask Mr Shipton whether the email was “problematic beyond a lack of professionalism?”

He responded “no” then went on to add: “As I understand … we were prepared and willing to continue with the investigation.”

Ms Orr didn’t let up on her probing of the case, to which Mr Shipton admitted:

“My understanding in that the issue was … (it was) plateauing and there wasn’t a high degree of confidence as regards to what else would be found,” he said.

Mr Shipton was in the witness box on the fifth and final day of hearings in Sydney before the royal commission heads to Melbourne next week. That will mark the final week of the policy round ahead of Commissioner Kenneth Hayne handing down a final report by February 1.

Mr Shipton was also forced to admit allowing CBA to be involved in the drafting of a press release was “a mistake”, but practice had since changed.

“Please do not conflate the case study that you’ve just referred to with current practice. Current practice is very different, radically different to that unfortunate case study,” he said.

“We will check the factual accuracy of a media release. Nothing more than that.”

Mr Shipton — who previously worked at the Hong Kong securities regulator and at Goldman Sachs — took the top job at ASIC in February.

ASIC was chastised in Commissioner Hayne’s interim report for not taking a harsher legal approach to its dealings with banks and other financial institutions.

In questioning yesterday, Mr Shipton said he was changing the focus at ASIC to ramp up enforcement and that a new policy would be made public in December.

Today he noted that while ASIC was pivoting away from community benefit payments, enforceable undertakings and infringement notices, Mr Shipton said they still had a place as regulatory tools.

“There is a place for these types of (infringement notice) arrangements … I will also say that we have over-utilised and over-relied on these types of outcomes,” he said.

After going after ASIC’s inaction on NAB’s loan introducer program yesterday, Ms Orr launched into questioning about why the regulator had not taken enforcement action against CBA’s mis-selling of consumer credit insurance.

She pointed out it was nearly two and half years ago that CBA brought it to their attention.

Mr Shipton argued that resourcing was a key issue at that time and ASIC had now started an investigation, outcomes of which would include potential litigation.