Senior bank executives facing criminal charges, ASIC warns

The corporate watchdog has flagged criminal prosecutions against senior bank executives.

Royal commissioner Kenneth Hayne. Picture: Kym Smith

The corporate watchdog has flagged criminal prosecutions against senior bank executives from almost 40 investigations into alleged breaches as the government prepares to extend the time jilted customers can seek redress from banks back to 2008, the start of the global financial crisis.

The Australian Securities & Investments Commission unveiled a 50 per cent increase in probes into Australia’s largest financial institutions over the past year as part of its formal response to the banking royal commission.

The response, ahead of an appearance before Senate estimates today, revealed almost 40 investigations and reviews into alleged corporate and civil breaches were under way by ASIC, which had set up a “centralised’’ internal enforcement office in a bid to tackle rampant wrongdoing in the sector after it received a bruising at the hands of the inquiry led by Kenneth Hayne QC.

As ASIC is questioned today on the extent of its investigations into the banking sector, the government will announce that the Australian Financial Complaints Authority, the main dispute resolution for jilted customers, will be able to consider complaints dating back to the start of 2008, with compensation available of up to $500,000 for consumers, $1 million for small businesses and $2m for primary producers.

The retrospective remit will likely allow victims of financial misconduct to seek redress from collapsed investment schemes and wrongly foreclosed loans at the height of the GFC when such failings were rampant.

Josh Frydenberg said the expanded AFCA remit would bring greater access for consumers and small businesses harmed by financial misconduct, and would start hearing cases from July. “Restoring trust in Australia’s financial system is part of the government’s plan for a stronger economy,” the Treasurer said.

AFCA chief executive David Locke said the change would bring justice to more people. “In most cases, we are currently only able to consider matters that have occurred within the last six years,” he said.

ASIC executives are pushing for better and more stable funding after years of piecemeal resourcing that has hampered its ability to keep corporate Australia on a tighter leash amid royal commission pressure to become a tougher cop on the beat.

Many recommendations from the commission have further extended ASIC’s remit, which has ­already expanded significantly over the last three decades.

Bill Shorten will announce today a Labor government would shake up the twice-yearly house economics committee grilling of the major bank executives to an accountability committee for the sector’s implementation of royal commission recommendations, to be monitored by a taskforce.

The Opposition Leader pressured the government to allow the passage of a private member’s bill it drafted to end grandfathered trailing commissions collected by advisers a year faster than the ­Coalition has proposed, and a ­series of bills closing loopholes ­enjoyed by car financier and insurance companies.

In its royal commission response released yesterday, ASIC said it had already “prioritised” work on 11 specific referrals of misconduct by eight companies or individuals referred to it by the Hayne inquiry, which the regulator expects to hand to the Commonwealth Director of Public Prosecutions for criminal charges.

Twelve more investigations have been launched into case studies that appeared before the banking inquiry but were not specific referrals from the former High Court justice.

The cases come on top of two Federal Court cases already under way against National Australia Bank over its $100 million fee-for-no-service scandal, and rogue ­financial advisory Dover Financial and its former boss Terry McMaster.

A further 16 cases are being ­assessed for prosecution.

ASIC has also reopened its investigation into life insurer ClearView Wealth over 300,000 alleged criminal breaches of anti-hawking laws.