The corporate regulator has said people will go to jail in the future if banks fail to report breaches to the watchdog – such as charging fees-for-no service – in a timely fashion.
James Shipton, the chair of the Australian Securities and Investments Commission (ASIC), told a parliamentary inquiry in Canberra that banks needed to take urgent action to clean up their act, as the financial industry had “abandoned its core role that of being custodians of other peoples’ money”.
“This dishonesty must not stand,” Shipton said.
“And unfortunately, whilst we are hearing important acknowledgements from leaders of financial institutions about change, such change is not happening as quickly as it should.
“ASIC is still experiencing slow and delayed responses from financial institutions and, in some cases, overly technical responses aimed at delay.”
Taking it one step further, ASIC deputy chair Daniel Crennan said the regulator would pursue action for breaches of the self-reporting requirement for banks and other financial services companies.
“If they choose not to comply with their 912D obligations people will be going to jail,” Mr Crennan said.
ASIC has never prosecuted anyone for a breach of the requirement to tell the regulator of a significant breach within 10 days under Section 912(D) of the Corporations Act.
The Commonwealth Bank, National Australia Bank and AMP have all admitted to breaches of Section 912(D) for not reporting fees-for-no service breaches, including dead customers.
Australia’s investigation into misconduct within its financial-services sector has identified “greed” as the key reason banks and other financial institutions repeatedly broke the law, as reported by International Investment.
While internal changes were important, it was just as crucial for ASIC to get access to increased penalties and regulatory powers and for the government to take a fresh look at ASIC’s budget, Shipton said.
“Hong Kong’s financial regulators are three times the size of Australia’s,” he added.