Day 344: 'You're not naming enough names'
An introductory weekday newsletter from Schwartz Media. Counting the days since the banking royal commission was established.
Good afternoon and welcome to day 344.
Today in summary: ASIC chair James Shipton says the regulator’s under-resourcing constrains it in almost every aspect of its work; outgoing Macquarie Bank chief Nicholas Moore goes into bat for mortgage broker commissions; and Westpac technology chief Dave Curran warns of a “trust gap” the industry must address if the new open banking regime is to succeed.
-- Charis
Current banker panic level: 😱
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It’s not just enforcement action against misconduct by banks that’s being held back by under-resourcing, ASIC chair James Shipton has told the Hayne royal commission.
“It’s certainly in investigations, certainly in other matters relating to enforcement, but I would also make the case that we are constrained in our surveillance, our supervision, our important work on financial capability, and – and other work that we undertake.”
Shipton was also questioned extensively on whether the regulator’s staff were too chummy with the bankers he and his team regulates, but he stood firm.
“I have mentioned to my colleagues the importance of treating carefully and with a healthy dose of scepticism some of our interactions with the regulated population. In my interactions and feedback from my colleagues, it’s very clear that they share that, that mindset, as well.”
Shipton said he’d called bank CEOs and leaders on a number of occasions to express his dissatisfaction with their approach, and remind them “they have forgotten that they are dealing with other people’s money.”
Outgoing Macquarie Bank chief Nicholas Moore has defended the commission payments the bank makes to its extensive network of mortgage brokers. He argued a move to fee-for-service wouldn’t be “as attractive as the current structure”, and not just for the bank.
“The broker network does provide genuine competition, and that genuine competition has reduced the cost for all mortgages. So our nervousness would be regulation could severely hamper that.”
Australian banks will soon have to share the financial data of their customers with potential competitors under the upcoming open banking regime. And Westpac technology chief Dave Curran is worried the “trust gap” in play right now could harm the entire exercise. Curran told a business audience banks need to be:
“focused on what's right for customers, communities and the country. As opposed to self-serving rights around how do I protect the dance around my feet.”
Today’s burn prize: ASIC chair James Shipton
🔥🔥🔥
Orr: "I'm putting it to you you're not naming enough names."
Shipton: "I think you've made a good point, Ms Orr."
Counsel assisting Rowena Orr, with the help of Commissioner Hayne, manages to convince ASIC’s James Shipton the regulator should dob in more badly-behaving banks.
The Commentariat
The Hayne inquiry was meant to be an examination of misconduct, but it is morphing into a review of governance, writes the AFR’s Chanticleer. And this means big changes for how boards operate.
“The Hayne governance era looks something like this: verbatim records of conversations held by board and sub-committee members, longer board meetings, more extensive board room information packs, intensive director induction programs, more robust challenging of management, and increased employment of lawyers and accountants as non-executive directors.”
Every time there's a major problem in the banking system, big institutions apologise, say they've fixed the problem and then spruik self-regulation, writes Alan Kirkland, chief executive of consumer group CHOICE.
“We need to make sure the big banks don't water down the reforms the hearings have revealed we need.
“To do that, we need to kick their lobbyists out of Parliament House and stop giving them "one more chance" with self-regulation.”
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