The Australian Securities and Investments Commission, or ASIC, has found itself at the centre of calls led by the Labor Party for a royal commission into the nation’s banking sector.
Labor is proposing a two-year investigation, costing around 50 million dollars.
It would focus on weeding out illegal and unethical behaviour, the industry’s duty of care to customers and what resources the regulators have to deal with illegal activity.
The calls come after a series of scandals in the sector, such as banks offering poor financial advice and imposing fees on customers without cause.
Labor Treasury spokesman Chris Bowen says a royal commission would allow a much-needed, thorough examination of the industry.
“A royal commission can pursue, and would pursue, systemic issues in an open and public and transparent manner. It would provide an opportunity for victims, for whistleblowers, to provide evidence to a royal commission. It would provide an opportunity, for example, to consider whether Australia’s whistleblower protections in the private sector and financial sector are strong enough to encourage people to come through and report things they are concerned about. That is not an opportunity available through ASIC.”
The Turnbull Government has criticised Labor for not backing a motion by the Greens for a royal commission last year before announcing its own last week.
ASIC, the Australian Prudential Regulation Authority and the Reserve Bank all regulate the nation’s banks.
But Labor says ASIC does not have the scope to examine broad, systemic issues.
ASIC chairman Greg Medcraft argues the organisation does have sufficient powers to pursue cases.
“We have all the powers of search, of compelling testimony and accessing metadata and records, in individual cases and collectively. At the moment, we’re running, basically, five investigations across sectors, and we often look at sectors and actually often come out with reports on sectors and prosecutions.”
Several investigations have already been completed, including last year’s Financial System Inquiry led by former Commonwealth Bank chief executive David Murray.
The previous Abbott Government has also been criticised for cutting ASIC’s budget.
University of Technology Sydney banking and superannuation expert Rosalie Degabriele says more is needed.
“ASIC does have limited powers to handle some of this, but, clearly … and we heard Greg Medcraft also say that he doesn’t feel that ASIC has sufficient ability to handle this kind of inquiry. And the evidence we’ve seen lately from the banks over four or five major issues is that there is a problem within the culture of the banks. So I don’t think his powers are working. Perhaps he needs a different set of powers, or perhaps he needs more general support.”
The calls for an investigation are increasing, with several Liberal MPs now joining the chorus of customers, consumer-rights campaigners and financial experts.
But Prime Minister Malcolm Turnbull is standing firm.
“We have given our regulators greater tools to deal with wrongdoing right across the business sector. So we’re giving our regulators and our tax collectors greater powers, and we’ll continue to do that.”