Treasurer Josh Frydenberg names Joe Longo ASIC chairman, replacing James Shipton

Former ASIC head of enforcement Daniel Crennan QC expects Joe Longo’s role as chairman of the regulator to be more like a chief executive.

Treasurer Josh Frydenberg with new ASIC Chair Joe Longo and Deputy Sarah Court. Picture: Joe Pehrson

ASIC’s former head of enforcement has strongly backed the Morrison government’s bid to resolve any confusion about overlapping roles and responsibilities at the conduct regulator, as it prepares for a five-year term under new chairman Joe Longo.

Josh Frydenberg announced the appointment of Mr Longo, himself an ex-head of enforcement, on Thursday, along with senior ACCC official Sarah Court as deputy chair.

He also flagged a new statement of expectations for the troubled regulator, making it clear that the government expected the commission as a whole to operate as a strategic board and that all operational matters would be the responsibility of the chairman.

Daniel Crennan QC, who resigned as ASIC deputy chairman and head of enforcement last October after a row over relocation expenses, said the statement of expectations was “a powerful tool” for the government to determine how the regulator should operate.

“Obviously, the government can’t instruct ASIC how to handle a particular enforcement case, but agencies left to their own devices might not travel in the right direction,” Mr Crennan told The Australian.

“From my reading, the chairman’s role will be more akin to that of a chief executive, which will probably be helpful.

“I guess the remaining commissioners won’t have day-to-day operational responsibilities.”

While at ASIC, Mr Crennan said he had dealt with Mr Longo professionally, and he expected him to do a good job as ASIC boss.

The chairman-in-waiting was “very intelligent, careful and balanced” and would benefit from his regulatory experience at Deutsche Bank, where the global bank had faced challenges which were almost “existential”.

ASIC’s senior leadership was left in disarray last October when chairman Mr Crennan resigned and James Shipton stepped aside pending an investigation into their relocation expenses.

Mr Shipton had claimed $118,557 for tax advice received from KPMG, while Mr Crennan had $69,621 in accommodation expenses.

Both were cleared of any wrongdoing in the independent review, enabling Mr Shipton to return as chairman until a successor was found.

Mr Frydenberg said Mr Longo, who is currently a senior adviser at national law firm Herbert Smith Freehills, and Ms Court were both “highly qualified and experienced individuals with a deep understanding of both the private and public sectors”.

“Joseph Longo has the right mix of experience,” he said.

“He’s been a lawyer, he’s worked in banking and he’s worked in a regulator, namely ASIC itself. So he knows the organisation.

“He‘s a level-headed, calm, considered professional, and we look forward to him leading that organisation at an important time because as you say, it’s been a turbulent period.”

The big loser in the search for a new chair was deputy chair Karen Chester, who made it clear she coveted the top job and was critical before a parliamentary committee of Mr Shipton’s handling of the expenses issue.

Mr Frydenberg said he had spoken to Ms Chester and Mr Shipton before the announcement, as well as ACCC chairman Rod Sims, Reserve Bank governor Philip Lowe and Australian Prudential Regulation Authority chair Wayne Byres.

The Treasurer thanked Mr Shipton for his contribution and commitment to ASIC since his appointment in 2018.

Outgoingc hair of ASIC James Shipton at a Public Hearing in Parliament House in Canberra, with Deputy Chair Karen Chester. Picture: Gary Ramage

“Mr Shipton has shown great commitment and dedication to ASIC during his three years as chair and I thank him for his service,” he said.

“I look forward to his continued assistance during the transition and wish him all the best in his future endeavours.”

Mr Shipton welcomed both appointments, saying Mr Longo was known to many people at ASIC from his time as head of enforcement from 1996-2000, as well as subsequent interactions in his role as a lawyer.

“His wealth of domestic and international experience will serve ASIC well in the vital work it does in supporting the financial system and economy, especially as Australia recovers from the downturn caused by the COVID-19 pandemic,” he said.

‘We are also pleased to welcome Sarah Court.

“Again, we know Sarah very well and appreciate the skill and experience she brings from our regulatory counterpart.

“We will work with Joe and Sarah over the coming weeks to manage a smooth transition to his leadership of the organisation.’

The statement of expectations, to be issued after Mr Longo and Ms Court start in their roles, will also require ASIC to support the nation’s economic recovery from COVID-19.

Legislation to implement the Financial Regulator Assessment Authority, in line with a recommendation from the financial services royal commission, will be introduced by the middle of this year.

The FRAA is designed to assess the effectiveness and capability of both ASIC and the Australian Prudential Regulation Authority.

It will consist of three independent statutory appointees together with the Treasury Secretary, with reviews to be conducted once every two years as directed by the Treasurer.

ASIC will be targeted for the first review “to assist the incoming chair in ensuring ASIC is operating effectively and consistent with the government’s statement of expectations”.

Prior to Herbert Smith Freehills, Mr Longo worked as general counsel for Deutsche Bank in London and Hong Kong for 17 years, and before that he was the national director of enforcement at ASIC.

Mr Frydenberg said Ms Court would bring extensive experience in regulation, compliance, consumer protection and civil litigation following her tenure since 2008 as a commissioner of the Australian Competition and Consumer Commission.

She is currently responsible for enforcement matters.

Before the ACCC she was a senior executive lawyer with the Australian Government Solicitor.

Ms Court will fill the role left vacant by Mr Crennan.