Treasurer Jim Chalmers to plug holes at ASIC’s helm, as Karen Chester signals exit

The Treasurer will have as many as three commissioner roles at ASIC to fill, after deputy chair Karen Chester told senior colleagues she’d decided not to seek another term.

Treasurer Jim Chalmers will have as many as three commissioner roles at the corporate regulator to fill in the next eight months, after the regulator’s deputy chair Karen Chester told senior colleagues she’d decided not to seek another term.

Ms Chester last week used an email to informed senior executives and staff at the Australian Securities & Investments Commission that she’s to depart the regulator in January when her term expired, sources said. An ASIC spokesman declined to comment on Tuesday.

Ms Chester’s time at ASIC has included periods of turbulence given the abrupt exit of prior chair James Shipton and then an investigation into her workplace conduct, following complaints.

In a letter to ASIC chairman Joe Longo, Treasury secretary Steven Kennedy noted he had found “insufficient basis” to pursue action against Ms Chester. She also maintained no adverse findings were made against her.

ASIC chairman Joe Longo in Melbourne. Picture: David Geraghty

ASIC commissioner Danielle Press sees her term expire in September, with sources suggesting she was open to continuing in the role if asked. Former ASIC commissioner Cathie Armour left the regulator mid last year, meaning there could be three spots up for grabs at ASIC’s helm.

Ms Chester is thought to have informed Mr Chalmers of her decision not to seek another term early this year.

The changing of the guard comes as the regulator is set to see its budget allocation peak at just shy of $500m in 2023-24, up from $470m this financial year and about $422m in 2021-22, according to the 2023 Budget on Tuesday night.

ASIC’s annual funding had fallen as low as $312m in 2015, before a spate of financial scandals resulted in the Hayne royal commission in 2018. The commission’s final report found ASIC and the prudential regulator often had relationships with industry players that were too cosy.

ASIC is, however, predominantly industry funded via levies it charges companies it supervises and regulates. In 2021-22, ASIC raised $1.68bn from cost recovery levies, according to its annual report.

On the thorny topic of investment scams, the budget papers said ASIC would receive $17.6m over four years from 2023–24, to “identify and take down phishing websites and other websites”. Those amounts will be recovered through levies collected by ASIC from industry.

Last month, the government outlined a further $4.3m allocation to ASIC to assist in the fight against greenwashing.

It’s a busy period at ASIC as Treasury assesses the industry funding system and the regulator responds to a review of its functions by the Nicholas Moore-led Financial Regulator Assessment Authority. Among the FRAA’s findings was that ASIC required a “substantial uplift” in data and technology, a move involving cultural change.

The Australian Prudential Regulation Authority’s budget allocation come in at $229m for 2022-23, which is forecast to edge up to $239m in the following financial year before plateauing at $240m in 2024-25.

Earlier this year, APRA chair John Lonsdale said he was closely monitoring the economic slowdown and bad debt levels among banks to gauge whether loan serviceability buffers were at the optimum level.

APRA in February released documents outlining its policy and supervision priorities.

The following month the Council of Financial Regulators was urgently convening as the demise of Silicon Valley Bank in the US, triggered fears about the stability of the global financial system.

Separately, the budget papers also showed $14.3m allocated over four years from 2023–24, relating o policy and reforms to beef-up the nation’s protection against “illicit financing” and assess the anti-money laundering framework.

Financial crimes regulator Austrac will receive $8.6m over three years from 2023–24 to “develop and consult stakeholders” on reforms to update Australia’s anti-money laundering and counter-terrorism financing regime.

That includes Austrac participating in a potential move to implement tougher global standards that capture professions such as lawyers and real estate agents within the anti-money laundering reporting regime.