ASIC issues warning to banks
The corporate watchdog has put Australia’s financial world on notice – lift the culture of your operation or face potential prosecution.
Australian Securities and Investments Commission chairman Greg Medcraft told a Senate estimates hearing in Canberra today that the culture of banks and businesses would be monitored in an attempt to lift confidence in the financial system.
Culture was a big driver of conduct in the financial industry that could result in poor outcomes for consumers.
“Given there is a strong connection between poor culture and poor conduct ASIC thinks culture is a major risk … in investor trust and confidence, the cornerstone of our financial system,” he said.
Committee chair, Liberal senator Sean Edwards, described Medcraft’s opening statement to the hearing as a “bombshell” but the commissioner said it was more of a “nudge”.
“It’s a warning to everybody,” Medcraft said.
The new approach is being tested by ASIC in a criminal law case, and the watchdog is in discussions with the director of public prosecutions.
ASIC commissioner Greg Tanzer said the approach was more than just ticking boxes to comply with the law.
“You need a culture that supports the long-term best interests of the customer,” he said.
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“Preserving that trust and confidence is obviously important for the industry as a whole.”
ASIC’s new direction comes after a number of financial scandals in recent years, some involving Australia’s big four banks.
The corporate watchdog also told the Senate Committee that it believes interest rates banks impose on credit cards is worth “close examination”.
“We would be very much prepared to work with Treasury to look at this issue; it is obviously something of community concern,” ASIC deputy chairman Peter Kell told the committee.
Independent senator Jacqui Lambie said the huge mark-up on credit card rates made “payday lenders look like charities”.
