Is ASIC back on track after a terrible 2018? 2019 started with an embarrassing interim report by the banking royal commission and has continued with stalled criminal charges against Clive Palmer, but positive signs for a better 2020 can be seen in ASIC’s strong stance against banks.
The Australian Securities and Investments Commission has urged the Morrison government not to “water down” regulations of the financial services sector. This December, ASIC deputy chair, Karen Chester, said the government needed to implement new, stricter regulations as banks have an “empathy gap” when it comes to consumers.
This comes after Australian treasurer Josh Frydenberg was lobbied by banks to stop the ASIC initiative to curb bank excesses. Chester warned that banks try to blame consumers and push for regulation that’s based on disclosure, which has proven ineffective. “Banks learn the limits and vulnerabilities of their customers (and) in doing so, exploit innate constraints in human cognitive capacity and exploitable behavioural biases,” she said.
The deputy chair of Asic, Karen Chester, warns banks to prepare for its new powers and urges the government not to bow to the sector’s pressure to water down regulations. Photograph: Lukas Coch/AAP
Chester’s remarks follow public outcry and strong criticism of ASIC in recent years. In January 2019, Reuters reported that “the banking royal commission’s interim report determined ASIC is not doing its job regulating or punishing banks and corporations, as it has simply stopped taking them to court.”
“Commissioner Kenneth Hayne, whose team oversaw the recent report, said ASIC systematically opted for negotiation instead of litigation, hence failing to protect the public from white-collar crime. This approach made then-Treasurer Josh Frydenberg call ASIC out, saying the situation “is clearly unacceptable and cannot continue”,” the Reuters article reads.
For many, a key example is the matter of Clive Palmer. The Queensland mining mogul and businessman is being investigated by ASIC for two corporate misconduct allegations; in the matter of Queensland Nickel, which collapsed in late 2015, Palmer is suspected of trading while insolvent and corporate misconduct and in the matter of Coolum Resort, a gold coast golf retreat taken over by the billionaire in 2011, Palmer could be charged with abetting or counselling the commission of an offence by another person.
In the Queensland Nickel case, Parliament recently heard that the corporate watchdog is nearing completion of a criminal investigation against Palmer. “We are at the point where we are in discussions with other government agencies about the appropriate way forward,” the Australian Securities and Investments Commission commissioner, John Price, told a parliamentary committee.“I wish to assure the committee that our investigations are well advanced.”
No criminal charges have yet to be pressed since Price’s remarks from September 2019.
In the Coolum Resort case, Palmer was charged with a breach of takeovers laws resulting from an episode in 2012 where another of his companies allegedly said it would buy the Coolum resort from existing investors but then failed to offer to buy their shares within a two-month time limit set down in the Corporations Act. However, the criminal allegations against him were stalled again in late September 2019.
The Supreme Court has dismissed a claim the charges are an abuse of process remains pending, but many are wondering when ASIC will finally reach conclusions in both cases. In Coolum Resort, unlawfully evicted villa owners, most of which are retirees, are battling Palmer in court to get power and water back in their villas. One of these people is the mother-in-law of Queensland Liberal National Party leader Deb Frecklington, who is also awaiting a decision by ASIC; Maree Frecklington has called Palmer “a bully who can’t be trusted”.
But there’s reason to believe ASIC is on the right path; just this month, ASIC has slapped a former NAB adviser, Wendy Chapman, with a five-year ban from providing financial services and banned a Queensland adviser named Nina Katherina Williams for one year. This is because both advisers “backdated advice documents to give the impression to her licensees that she had complied with her obligations under the law”.
In another case, also from December 2019, A former senior manager at the Australian Prudential Regulation Authority (APRA) has been hit with criminal charges, including allegedly providing the regulator with false documents while he was the chief executive of a credit union.
Hopes remain high that this much needed crackdown by ASIC management, and especially deputy chair Karen Chester, heralds a new future for the Australian Securities and Investments Commission. For many, in the battle for renewed public trust and taxpayer confidence, the Clive Palmer case could be the final frontier.
