Finance Finance News ASIC eyeing criminal prosecutions after royal commission

ASIC eyeing criminal prosecutions after royal commission

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The corporate watchdog is contemplating more than 40 court cases – including criminal prosecutions – in the wake of the banking royal commission, as it adopts a litigate-first strategy.

In an update on its steps to implement the banking royal commission’s recommendations, the Australian Securities and Investments Commission (ASIC) also flagged a push for more funds to back its new aggressive approach and to fund new responsibilities it is expected to gain.

It said its enforcement teams were “undertaking investigations into 12 matters that were cases studies before the royal commission” and assessing another 16 case studies “to determine whether investigations should be commenced”.

“ASIC expects these investigations to result in a number of referrals to the Commonwealth Director of Public Prosecutions for assessment for criminal prosecution,” the regulator said.

ASIC has already launched civil action in the Federal Court against the trustee of a NAB super scheme for charging tens of millions of dollars in “fees for no service” after the practice was exposed at the royal commission, and separate civil action against Dover Financial Services over alleged misleading conduct.

According to the regulator, there has been a 15 per cent increase in the number of ASIC enforcement investigations on foot and a 50 per cent increase in the number of ASIC enforcement investigations of misconduct by large financial institutions since last February.

The crackdown follows strong criticism of ASIC by the royal commissioner, Kenneth Hayne, over its willingness to do deals with banks that had committed serious breaches of the law rather than take court action against them.

ASIC confirmed in the update that it has adopted a new approach that emphasises court-based enforcement – dubbed a ‘why not litigate?’ posture – and is also establishing a separate Office of Enforcement to promote and pursue litigation.

Justice Hayne was scathing about the past unwillingness of ASIC and the Australian Prudential Regulation Authority (APRA) to take court action against banks, insurers and superannuation fund trustees for breaking the law.

“Much more often than not, when misconduct was revealed, little happened beyond apology … a drawn-out remediation program and protracted negotiation with ASIC of a media release, an infringement notice, or an enforceable undertaking that acknowledged no more than that ASIC had reasonable ‘concerns’,” he wrote.

“[Too often transgressors were] treated in ways that would allow them to think that they, not ASIC, not the Parliament, not the courts, will decide when and how the law will be obeyed or the consequences of breach remedied.”

ASIC said it acknowledged the government’s response to the royal commission that the findings, recommendations and referrals of the royal commission ‘will require the regulators to take on new responsibilities and, in many cases, simply do more’.

“ASIC will work with the government as it seeks to ensure that regulators remain appropriately resourced and as it considers what additional funding is required in the 2019-20 budget context,” ASIC said.