New chiefs for ASIC in corporate plan

Regulator creates two senior positions as part of a four-year plan to deal with the pandemic and reinforce confidence in the system.

ASIC chairman James Shipton addresses a web forum.

ASIC has created two new senior positions as part of its 2020-24 corporate plan to deal with the COVID-19 pandemic and reinforce confidence in the financial system.

The appointments include the elevation of Warren Day to chief operating officer from executive director, assessment and intelligence, while Zack Gurdon has been recruited as chief risk officer from his role at the NBN, where he leads group risk, resilience and compliance.

Australian Securities and Investments Commission chairman James Shipton said the core purpose of the corporate plan was to ensure that the financial system remained strong, fair and efficient, even under stress.

“This is the purpose of all our work, both in the immediate context of the pandemic and beyond it,” Mr Shipton said.

“We will continue to respond rapidly and strategically to the threats arising in an uncertain environment.”

ASIC adjusted its normal strategic planning cycle in response to COVID-19, releasing an interim corporate plan for 2020-21 last June.

New activities flowing from the interim plan included cross-ASIC working groups on scams, unlicensed advice and misleading advertising; expansion of markets supervision to ensure orderly operations and investors were appropriately informed, and providing relief on capital raisins, shareholder meetings and reporting, and financial advice.

ASIC also helped to ensure there were measures in place to help customers in financial hardship, especially in relation to credit and insurance, and facilitated access to financial advice for people considering early access to their superannuation.

Over the following months, the regulator worked on its four-year plan, which it released on Monday.

One of the complications in developing the plan has been the delay in the federal budget until mid-October.

The extent of ASIC’s funding is therefore uncertain.

Mr Shipton said the regulator, in any event, had resumed a lot of the work that had been disrupted by the pandemic, including implementation of the recommendations from the financial services royal commission.

Over the next four years, he outlined seven areas of focus, starting with promotion of “confident participation in the financial system” to support long-term economic recovery.

Despite some recent court setbacks, ASIC would persist with its “why not litigate?” approach to deterrence of misconduct - a mantra originally put forward by royal commissioner Ken Hayne.

It would also promote a healthy financial system and economic growth by improving companies’ management of key risks, address consumer harm as a result of elevated debt levels and hardship, particularly with predatory lending, and reduce poor product design and restrict misselling.

Mr Shipton prioritised combating misconduct by company directors and professional service providers, and delivering as a conduct regulator for superannuation.

“We will continually assess and prioritise our focus areas as threats and harms evolve across our regulated sectors,” he said.

“We will also continue to engage constructively with the regulated population, other regulators, governments and consumers to help maintain the proper functioning of the financial system.”

On the enforcement front, ASIC said it would be guided by “why not litigate?”, which addressed the community’s expectation that unlawful conduct should be “punished and publicly denounced” through the courts.

Priorities included cases studies and referrals from the royal commission, misconduct related to superannuation and insurance, matters which carry new or higher penalties, illegal phoenix activity and auditor misconduct.

Significant market misconduct would also be a priority, as would misconduct by individuals, particularly criminal conduct or governance failures at a board or executive level.

“Where required, ASIC will take a taskforce approach to ensure that dedicated resources are available to address the most serious or prevalent types of misconduct,” the agency said.

“This is consistent with the approach ASIC has taken to address misconduct within major financial institutions and to deal with referrals and case studies from the financial services royal commission.”

On superannuation, the main areas of focus would be on the provision of inappropriate products to fund members that either provide little benefit or offer poor value for money; inappropriate disclosures or practices concerning fees, and trustees failing to act in the best interests of members.