ASIC staff to be embedded in banks to be warned against bias

ASIC staff to be embedded in big banks to oversee their conduct will be trained to maintain their distance from bank employees.

ASIC chair James Shipton appears at a parliamentary committee hearing. Pic: Kym Smith

Corporate watchdog staff to be embedded in five of Australia’s biggest banks to oversee their conduct will be trained to maintain their distance from bank employees.

Australian Securities and Investments Commission chair James Shipton told a parliamentary committee in Melbourne that about 25 staff would be embedded across Commonwealth Bank, ANZ, NAB, Westpac and AMP.

Mr Shipton said the starting point was for ASIC staff to be trained in maintaining professional scepticism ahead of spending months inside an institution.

“It’s to train very intelligent professionals to be aware of the psychological bias we all have to be friendly,” he said.

Mr Shipton told the parliamentary committee the process of embedding staff would be limited by the “sheer force of numbers”, as the major banks had a workforce of about 30,000 people each compared to ASIC’s 1600.

The size of the banks also created the risk of embedded staff being “lost in the weeds”, he added.

The process is expected to begin at the start of next month when ASIC will “take the pulse” of each bank.

The federal government announced a $70.1 million funding package for ASIC last week, which will partially go towards the embedded staff — a direct result of the banking royal commission.

The corporate watchdog’s staff will ensure the major banks are adhering to the rules, while also aiming for behavioural change from staff.

Mr Shipton was testifying to the parliamentary committee about the banking regulator’s activities and corporate legislation.

In his opening address he said ASIC, the banking regulator, was talking to the Commonwealth Director of Public Prosecutions over 134 cases in the sector.

He said the funding boost will also go toward enhanced supervision for superannuation, the creation of a corporate governance task force and a review into the effects of conflicts of interest within the sector.

AAP