ASIC to sue big banks ‘in weeks’

ASIC will launch litigation against financial services companies in ‘the next few weeks’, according to ASIC’s Daniel Crennan.

ASIC deputy chair Daniel Crennan

ASIC will have post-royal commission litigation ready to launch against financial services companies in “the next few weeks”, according to ASIC deputy chair Daniel Crennan.

“We will issue proceedings involving the big six (the big four banks, AMP and Macquarie) before Christmas,” he said.

In an interview accompanying the release of the regulator’s latest enforcement update, Mr Crennan noted “the government has supported us well and helped create an environment to increase ­activity”.

ASIC was under fire during the royal commission for not pursuing enough court cases. In the last six months it has accepted just one court-enforceable undertaking, down from nine in the six months to December.

Since then overall investigations have increased by 20 per cent. Those involving banks have risen by 51 per cent and in the wealth management industry they have more than doubled in the past six months.

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ASIC was committed to the “why not litigate?” approach suggested by royal commissioner Ken Hayne, but Mr Crennan said: “This approach does not suggest we take every matter to court but allows us to consider relevant factors to ensure we are doing what we should to punish past misconduct and to deter future mis­conduct”.

He noted the $404 million in increased funds on offer from the federal government, saying in “the next year ASIC will continue with its recruitment program to increase the number of analysts, investigators and lawyers in our ranks”.

“Many of the tools are now in place to deliver a stronger legislative, enforcement and regulatory framework with tougher penalties,” Mr Crennan said in a statement.

“The Office of Enforcement, under the control of Sharon Concisom, is continuing its work on the 13 matters referred to ASIC by the royal commission as well as a significant number of matters that were examined as case studies in the royal commission hearings.”

On top of the 13 specific referrals from Mr Hayne, there are 39 other matters covered in the commission that ASIC was already investigating.

“The Office of Enforcement is ready to deliver on the public’s expectation to hold wrongdoers to account,” Mr Crennan said.

Mr Crennan was appointed to ASIC last year and completed a review of the enforcement operations in December.

The recommendations included that it no longer settle cases before opening a formal investigation — a move that allows it to use the full weight of widespread powers that include the ability to demand documents and interview people under oath.

The review, which was handed to Mr Hayne before his final report and was effectively endorsed by him, also said the commission should formulate guiding principles and operational guidelines for the Office of Enforcement that focus on deterrence, public denunciation and the punishment of wrongdoing by way of litigation — and not by the pursuit of negotiated outcomes.

ASIC was criticised for being too quick to accept court-enforced undertakings and Mr Crennan told The Australian: “We have little appetite for undertakings which do not come with admissions of guilt”.

The latest report shows a sharp increase in the number of investigations, but as Mr Crennan noted, it is still early days in the new policy, and enforcement actions are in line with the report for the last six months of 2018.

There were 10 criminal charges, against nine in the previous period, and 386 criminal charges in summary prosecutions for liability offences, down from 433 in the previous six months.

One hundred and three people were banned from operating in the financial services industry, up from 72 in the previous period. There were 77 investigations started and 48 completed.