“Finance exists to serve Australians: it is a means to an end; but not an end in itself. Therefore, finance always needs to be anchored to the core functions it serves for society,” he said.
“For there to be meaningful improvement of the financial markets, I think financial institutions must embrace and embed fairness into everything they do. They must build systems and processes in their businesses that both embed the legal and community expectations of fairness as well as to act fairly and professionally,” he said.
“Financial institutions must rise to this challenge. We also do not want to see resistance and reluctance to the job that the community expects us to do as a conduct regulator and corporations’ law enforcer.”
‘Why not litigate?’
ASIC was criticised by the Hayne royal commission for being too timid on banks and other financial firms. The regulator last year adopted a mantra of “why not litigate?” in its approach to enforcement.
Mr Shipton explained that it did not mean ASIC would “litigate everything”. Rather, he said ASIC would consider going to the courts if it thought the law had been broken, and taking court action was in the public interest.
He also highlighted work of ASIC’s “close and continuous monitoring” of financial firms, saying the program had raised concerns about management and control systems, which had been passed on to chief executives.
ASIC was also reviewing corporate governance practices in big financial services firms, including how they deal with non-financial risks and how pay is set for senior management. The review will be published later this year.
Several top international regulators are also attending the Sydney conference, as countries overseas face a similar erosion of trust in their banks after episodes of poor conduct.
Ashley Adler, the chairman of the global regulatory body, the International Organisation of Securities Commissions (IOSCO), said Austraila’s finance sector was going through its own “conduct crisis,” which had occurred years earlier overseas with the rigging of key interest rate benchmark, LIBOR.
He pointed a study that had shown misconduct was a recurring feature of finance over the last 200 years or so, due to “fundamental” incentives in the sector.
Maureen Jensen, chair of Canada’s Ontario Securities Commission, said it had been dealing with the problems of a sales culture, and transparency of fees and risks to clients. Just as ASIC has forced mass refunds of fees for advice that wasn’t provided, she said about US$400 million fees had been returned to clients in the Canadian province.
Clancy Yeates is a business reporter.