Glass houses, stones and the ASIC leadership

ASIC’s post-royal commission ‘why not litigate stance has been punctured by the irony of potential corruption within its own ranks, strengthening the case for a new leadership philosophy at the regulator based on co-operation and common sense.

When news broke on Friday afternoon that ASIC chair James Shipton had stood aside amid questioning by the Australian National Audit Office on the scale of his $118,000 accounting expense bill, the adviser community was able to quickly find the irony in the situation.

“Remuneration is meant to be ‘fair and reasonable and represent value for money’, is it not?,” said one ifa reader, quoting from the FASEA code of ethics.

“10-year look-back on everything they have done?” another commenter suggested.


“That is not very ethical. Maybe Mr Shipton should sit the FASEA exam,” a third reader said.

It’s true that advisers have been through the ringer in the last few years as layer after layer of regulation has been added to the advice process, to the point where it’s become exceedingly difficult to do their jobs without a weighty paper trail of evidence to satisfy both ASIC and their licensee.

As the regulator was put under the microscope for its lack of action at the royal commission, the resulting ‘why not litigate’ philosophy pursued under Mr Shipton has only ramped up the pressure on the advice sector. 

While overshadowed by the news of the chair’s abrupt departure, ASIC’s annual report tabled on Friday noted that adviser bannings had doubled year on year during the 2020 financial year.

One could argue that ASIC’s hand was forced by the inquiry into taking a keener eye to enforcement of adviser misconduct. But for a regulator to pursue a strict, letter-of-the-law approach that allows firms little chance to correct their own mistakes, they must first ensure their own conduct passes “the pub test”.

As the saying goes, those who live in glass houses shouldn’t throw stones.

Mr Shipton’s resignation was quickly followed by his deputy Daniel Crennan on Monday, amid media reports that Treasurer Josh Frydenberg was considering an overhaul of the regulator’s leadership structure pending the outcomes of a review into its remuneration processes in December.

Suggestions that an overly bureaucratic internal structure led to the resignation of ASIC financial services executive director Paul Newson after just two months in the role, were further echoed in freedom of information documents obtained by ifa last month, which revealed dozens of revisions across multiple ASIC departments were needed to draft a single response to a Labor MP’s request to investigate AMP’s BOLR contract revisions. 

With the regulator’s post-royal commission direction having seemingly proved a failure, it’s hoped that the ‘new broom’ the government may look to usher into ASIC in Mr Shipton and Mr Crennan’s wake could prove to be a philosophy built on stronger foundations of co-operation and common sense. 

Addressing the FSC’s Future of Advice Summit last week, ASIC commissioner Danielle Press spoke of the need for the regulator and industry to “stop fighting each other and start working together”, as well as to acknowledge that many of the misconduct issues dealt with in the royal commission had happened in a different regulatory environment.

“When we’re looking at past conduct we should make it clear that it's past conduct, make sure the narrative is about what happened in the past and think about the improvements we are seeing now and into the future,” Ms Press said.

Though conceding she was partly restricted by legislation that would ultimately need to be addressed by government, Ms Press indicated a desire to work with the advice sector to strip out as much regulatory complexity as could be achieved at a regulator level.

It was a positive sign for an industry that has primarily dealt with hard-nosed tactics and an ‘enforce first, ask questions later’ attitude from the regulator in recent years, and one that can hopefully be built upon further given the fall of the current leadership.

Glass houses, stones and the ASIC leadership
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