The Australian Securities and Investments Commission (ASIC) chair, James Shipton, has come under fire from the Royal Commission, with both Senior Counsel assisting the Commission, Rowena Orr SC, and Commissioner Kenneth Hayne seeming dissatisfied with how the regulator intended to prove its performance improves going forward.
Following an interim report from the Royal Commission that slammed ASIC’s lack of effective enforcement action on industry wrongdoers, the regulator entered a submission in which it said it would measure its regulatory strength against a baseline.
When asked by Hayne who would regulate that baseline however, Shipton admitted that it would be ASIC itself.
“That all becomes self-referential,” Hayne said. “Where is the intellectual rigour in that process?”
Shipton countered that the rigour was in the fact that everyone would see it: “We now have a baseline of the poor performance of financial institutions, so if that baseline is improving, that would mean both the institutions and the regulator is improving. So what we are developing aren’t subjective assessments but objective assessments for the world to see”.
ASIC also put forward in its submission to the Royal Commission following the interim report reviews by the Council of Financial Regulators (CFR) as a way of regulating its performance. Following questioning from Orr on why this was appropriate, Shipton said that in his international experience, peer reviews from other regulatory were “extremely useful” and that the CFR could also help establish the above baseline metrics.
Shipton reinforced that these suggestions were not exclusive and that other methods of regulation should be explored too. He said however, that he believed existing frameworks should be improved rather than just staying anew.
Orr finished by suggesting that perhaps regulation of ASIC should instead be done by an independent body designed for that purpose.
