ASIC questioned over governance practices

The Royal Commission has asked the Australian Securities and Investments Commission (ASIC) why recent new senior level roles were all filled by internal candidates from a limited pool, amid questions about the regulators’ governance practices.

As Senior Counsel assisting the Commission, Rowena Orr SC, pointed out, the positions were not advertised externally and, based on Orr’s reading of the relevant documentation, taken from “a very limited category of internal candidates”.

ASIC chair, James Shipton, put this down to four factors:

  • “A desire for the transition to take place as quickly as possible”;
  • “A realisation that we had a a majority of new external commissioners coming on board who were providing that external reference point and experience”;
  • “A recognition that we needed to retain institutional knowledge and regulatory experience”: and
  • “Having experienced this through recruitment process for additional commissioners and through his experience globally, it is “extremely difficult to find outside of a regulatory agency people with demonstrably referable regulatory experience”.
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When Orr suggested that the appointments were a good chance to bring about some external experience on a day-to-day operational level, Shipton reiterated his point about the lack of regulatory experience at a senior level.

Shipton conceded Orr’s point that candidates could have come across from other regulators, but said that ASIC had still decided to fill the positions for the reasons above, most particularly that of new commissioners already bringing new perspectives.

Earlier in the hearing, Orr questioned ASIC’s governance structure, asking whether “it was poor governance practice” to only have executive directors.

Shipton said that he was “very aware of hypocritical risk”, meaning that if the regulator expected a standard of others, it must also meet that standard. He believed that the optimal model for ASIC was to have fulltime commissioners with experience providing strategic oversight, direction and guidance, and challenge to the executive group, who did not have executive responsibilities, and the above hires were in line with this.

After being directly asked Orr, Shipton said that it could be appropriate for the BEAR regime to be extended to ASIC and the Australian Prudential Regulation Authority to require the same standards of them as those they regulate.




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About time they are queried on how they do things. Hypocritical to impose standards on us that they would not expect to have to adhere to. A thorough investigation into ASICs practices, ethics, knowledge and consistency of application needs to be done

Likewise, the 'closed house' approach to employment practices is unacceptable and I would also query why the only exception to this of late has been in appointing two ex-ISA executives. Clearly an unacceptable inconsistency and a clear political alignment in its culture for a supposedly independent unbiased regulator.

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