Back in April, Treasurer Josh Frydenberg neutered ASIC by appointing former banking lawyer Joseph Longo as chairman of ASIC and directing him to support the economic recovery from the pandemic rather than enforcing financial system conduct:
Frydenberg made it clear the direction of ASIC would be changing dramatically from the tougher stance foisted on it by the Hayne royal commission just three short years ago.
A new government statement of expectations will “make clear the government expects ASIC to support Australia’s economic recovery from the COVID-19 pandemic”.
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Last month Frydenberg released the government’s statement of expectations, which directed ASIC to throw the Hayne Royal Commission under the bus:
Treasurer Josh Frydenberg appears to have thrown the most important findings of the banking royal commission under a bus, in glorious double-speak.
On Thursday he issued a direction to the Australian Securities and Investments Commission through what is known as a statement of expectations…
This one includes an entirely new clause, placed right at the top.
The government expects ASIC to:
“…identify and pursue opportunities to contribute to the government’s economic goals, including supporting Australia’s economic recovery from the COVID pandemic”.
It’s an odd role for a corporate cop, on its face inconsistent with the way ASIC itself describes its function in the “our role” tab on its homepage.
Perhaps not yet updated to take account of the guidelines, ASIC’s description says it is a regulator whose job is to “take whatever action we can, and which is necessary, to enforce and give effect to the law”…
The statement says the government expects ASIC to “act independently” but also says it should “consult with the government and treasury in exercising its policy-related functions” — a requirement not previously expressed in those terms.
According to Andrew Schmulow, Senior Lecturer of Law at the University of Wollongong, ASIC has been transformed from a corporate watchdog to a “lapdog”:
ASIC was described as “weak, hesitant and timid” in a 2014 Senate review of its performance… Now any assessment could add “dazed and confused”.
Last week we got a dose of that in the doublespeak of ASIC’s new chair Joseph Longo and deputy chair Sarah Court in their “first significant media interview” — with the Australian Financial Review.
The pair were asked about ASIC’s commitment to the “why not litigate?” approach recommended in 2019 by the Hayne royal commission into misconduct in the financial services industry…
“I love litigation,” Longo told the AFR. “It’s what I used to do and Sarah is an expert at it.”
But in the same interview Court — ASIC’s head of enforcement — said the why-not-litigate strategy “has had its day”…
Confusion is to be expected when a regulator is told to both enforce and refrain from enforcing the law — which is effectively what the federal government did last month in the “statement of expectations” it handed ASIC.
The previous statement, issued in 2018, began with acknowledging “the independence of ASIC and its responsibility for market conduct regulation”.
The new statement begins by saying ASIC is expected to “identify and pursue opportunities to contribute to the Government’s economic goals”…
The answers Longo and Court gave the AFR also suggest ASIC is backing away from the Hayne royal commission’s recommendation on “enforceable undertakings” — by which transgressors negotiate a settlement without an admission of wrongdoing…
The impression gained is of an attempt to pay some lip service to the royal commission but also demonstrate fealty to the federal government…
Australia’s battered and bruised financial consumers have every right to say to the regulator, and the government: enforce the law, or get out of the way.
In short, the Morrison Government has transformed ASIC into a paper tiger “yes minister” regulator.
Kenneth Hayne must be watching on in disgust. What was the point of conducting the banking royal commission when its recommendations are being directly contravened by the government?
Each day, Australia inches further toward a plutocracy.