Friendly approach to banks a ‘mistake’, says ASIC

The corporate regulator has admitted it allowed Commonwealth Bank to help draft a media release.

ASIC chairman James Shipton in Sydney yesterday. Picture: AAP

The corporate regulator has admitted it allowed Commonwealth Bank to help draft a media release while it also held talks with National Australia Bank over a potential settlement of legal issues.

Australian Securities & Investments Commission chairman James Shipton admitted to the Hayne financial royal commission that these practices were “mistakes” and the regulator had an “over-reliance” on infringement notices and enforceable ­undertakings.

The revelations follow a series by The Weekend Australian in April last year where it revealed that the corporate regulator ­watered down a press release about the Commonwealth Bank’s wrongdoing after discussions with senior executives at the bank. The collaboration with press releases also extended to Westpac, National Australia Bank and Macquarie Group.

Senior counsel assisting, Rowena Orr QC, took aim at 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.

“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?”

The royal commission saw emails including one in which ASIC staff flagged that CBA’s CommInsure arm had itself raised concerns about the perception that a community benefit payment would indicate that CBA was paying off the regulator.

Kenneth Hayne yesterday raised doubts as to why ASIC needed to check with the businesses it regulates for “factual accuracy”.

“Those are the matters … at the core of what ASIC alleges ... ASIC should know what it alleges ... and it should know what the ­entity ­admits ... and there should be no controversy about either what is alleged or admitted,” 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 Mr 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.

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 Mr Hayne’s interim report for not taking a harsher legal approach to its dealings with banks and other financial institutions.

Under 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 next month.

“I want to make it crystal clear we will be undertaking more court-based actions. We will be more adventurous, as it were, in pushing points of law. We will be taking more — let’s call it risks, because we now have, through my direct engagement with the government, more funding to do exactly that,” he said.

He said community benefit payments, enforceable undertakings and infringement notices still had a place as regulatory tools.