Among the less-noticed aspects of Commissioner Kenneth Hayne’s final report was a backhander for parliamentary committees. He seems to think that at least one of them is useless.
The Australian Securities and Investments Commission is supposedly overseen by the Parliamentary Joint Committee on Corporations and Financial Services.
As most observers have known for years and as the royal commission has exposed, ASIC has failed miserably – been asleep at the wheel, a captive of the bastards it was supposed to be keeping honest, held in dismissive contempt by the vastly better paid and threateningly well-lawyered financial giants.
For that, the committee responsible for ASIC needs to take the blame.
Commissioner Hayne effectively just told all the pollies on those committees over the past decade or so they were deficient.
Less than that, they were useless. I well recall committee hearings where pollies huffed and puffed a bit over whatever the latest scandal was but let the farce roll on regardless. Or worse – they allowed ASIC’s resources to be reduced.
That’s no surprise. Good heavens, three relevant ministers with recent oversight of the financial planning and superannuation shortcomings (Arthur Sinodinos, Kelly O’Dwyer, Josh Frydenberg) worked for banks.
Did they take the banks’ line and fight to avoid a royal commission because they knew how bad the system was and wanted it covered up?
I don’t think so. In my opinion, they were merely ignorant about the real world and/or put their political interests first.
So to overcome the politicians’ failure, Commissioner Hayne recommends there should be another regulator, a regulator of regulators, to check on what ASIC and APRA and, presumably the ACCC (the third member of our deficient “three peaks” regulatory model) get up to.
But now another regulator? As a member of the Twitterati put it, a lawyerly move, “To suggest a regulator regulate the regulators to ensure the regulators regulate”.
We’re “into the second derivative of regulator oversight,” according to another.
But even with a regulator regulator, it’s still an unreformed ASIC that is being left to start doing what it was supposed to be doing all along, to enforce the laws ASIC hasn’t been enforcing.
Ditto for APRA, although not to quite the same extent of failure given that the prudential regulator has conflicting interests in being first charged with ensuring our financial institutions are rich and solid.
There has been a great deal of focus on the failure of financial industry culture, Commissioner Hayne’s core finding. There are numerous recommendations aimed at curtailing temptation and opportunities for the greedy and unscrupulous.
But what about ASIC where the culture failure also has been massive? It’s carry on up the financial jungle.
And this isn’t the first supposed reset for the watchkitten.
Remember that Scott Morrison, back when he was still furiously trying to avoid a royal commission, announced more money and a set of dentures for ASIC to make it a “tough cop on the beat”. It didn’t.
After all that has unfolded, Commissioner Hayne has told ASIC to be ASIC, to enforce the law that it’s supposed to enforce.
The question unasked is whether ASIC’s culture will be suddenly capable of that, where the missing fire-in-the-belly and healthy scepticism will be found.