ASIC ramps up financial system planning for coronavirus

ASIC has contacted banks, super funds and other financial players to find what continuity arrangements they have in place.

ASIC chair James Shipton in Canberra. Picture Gary Ramage

The corporate regulator is ramping up its planning for pandemics and is holding talks with regulators both at home and overseas, as well as players in the financial market amid the growing threat of the deadly Covid-19 coronavirus sweeping the globe.

The Australian Securities and Investments Commission has also warned it is watching for any scams that may surface for unsuspecting investors and consumers through the virus threat.

“ASIC has processes in place to deal with risks including monitoring and planning for the potential consequences of pandemic events,” ASIC chairman James Shipton told a Senate estimates committee on Thursday.

“Internally we have a pandemic response plan in place in relation to Covid-19. Externally, we are working closely with fellow regulators both domestically and overseas to monitor the situation in part in relation to our capital and financial markets.

ASIC has contacted banks, super funds and other financial players to find out what business continuity arrangements they have in place and is also monitoring the continuous disclosure of ASX-listed companies as a result of changing market sensitivities, he added.

Also fronting Senate estimates on Thursday night bank, super and insurance regulator the Australian Prudential Regulation Authority said the nation’s financial system is well placed to ride out short-term volatility brought about by the coronavirus,

But APRA chairman Wayne Byres has told a Senate Estimates hearing a longer-term disruption “will require a fair bit of resilience,”

“Our assessment is that institutions that are at the core of the financial system are very vigilant to the risks that the current situation is posing to their businesses, both financial and operational and are planning for a range of scenarios, so it’s very much front and centre,” Mr Byres said.

“The build up of financial resilience in recent years has meant that the system is well placed to ride out short-term volatility in financial markets, the sort of volatility we’re experiencing at present. But obviously if there’s any longer term disruption that will require a fair bit of resilience,” he cautioned.

ASIC’s Mr Shipton said the regulator was particularly aware of the heightened risk of scams in times of stress and advised consumers to be on alert.

“We have found that during periods of stress in the community unscrupulous operators can take advantage of people’s fears and vulnerabilities. At this point in time we’re not seeing anything...we need to be on the alert,” he said as he noted the regulator was also monitoring for scams related to insurance claims coming out of the bushfires.

“We are carefully considering whether there are building or repair practitioners offering services to bushfire-affected communities... that take advantage of fire affected communities who may be seeking to side cut insurance companies themselves, to secure an early insurance payout for a fee.. We haven’t yet identified any systemic problems,” commissioner Sean Hughes told the committee.

In a wide-ranging hearing, ASIC also faced questions on the roles of the various regulators amid criticism of their actions being too lenient on the banks.

“We are very conscious of the need for active regulatory and enforcement cooperation by the different regulators,” Mr Shipton said.

“We have very recently signed an updated and enhanced (memorandum of understanding) between us and APRA… right now we are actively cooperating with APRA on a number of investigations involving the courts and the enforcement tool.

“We are also working closely with the ACCC and often share responsibility or delegate the legislative or enforcement responsibility to each other where our responsibilities are best placed,” he added.

Investigations against Clive Palmer were also addressed, with ASIC confirming they were ongoing.

“Broadly speaking (other matters under investigation concerning Mr Palmer) they relate to various issues to do with the liquidation of Qld nickel and they are relevant to a range of parties,” commissioner John Price said.

The regulator confirmed it is making enquiries in relation to supply chain finance and clarified that its work was primarily focused on market transparency.

In relation to the nation’s biggest super fund AustralianSuper recently raising its administration fees following the introduction of the Protect Your Super changes, Mr Shipton said the regulator was actively looking into the super fund’s disclosure of around increase, but not the fee increase itself.

“We are seeking further and better particulars from AusSuper in relation to it...We don’t regulate the fees. I can’t comment on the fees except to say no one likes fees to go up.”