ASIC reveals motivation behind enforcement strategy

In a speech at the ASIC Annual Forum 2019 in Sydney, chair James Shipton justified its ‘why not litigate?’ strategy it adopted last year even before the Hayne royal commission issued its final report.

“The aim of this is to deter future misconduct and address community expectations that wrongdoing be punished and publicly denounced through the courts,” Mr Shipton said.

“This means that once ASIC is satisfied breaches of the law are more likely than not and the facts of the case show pursuing the matter would be in the public interest, then we will actively ask ourselves: why not litigate this matter?

“Our enforcement work has a core focus on deterrence, public denunciation and punishment of wrongdoing by way of litigation.”

Mr Shipton also explained its new supervisory approach, which he said is all about promoting permanent cultural and behavioural changes in institutions individually and across the financial services industry more broadly.

“Our new approach helps detect cultural, organisational and management failings that lead to conduct problems, breaches of the law and unfair outcomes,” he said.

“Supervision also adds a focus beyond current known non-compliance to look at things that create significant risk of future breaches. Importantly, we are increasingly using advanced data and market analytics in this work to detect misconduct early.”

Further, Mr Shipton said supervision has a strong focus on governance and culture, thus allowing ASIC to better understand a firm’s business models and risk management processes.

“This allows us to adjust our regulatory approaches in response to the complexity, innovations and continuous change in entities and markets,” he said.

Adrian Flores

Adrian Flores is a deputy editor at Momentum Media, focusing mainly on banking, wealth management and financial services. He has also written for Public Accountant, Accountants Daily and The CEO Magazine.

You can contact him on [email protected].