Tough cop on the beat, more funding, tougher enforcement, blah blah blah — where have we heard claims about the Australian Securities and Investments Commission upping its game before?
This morning the government announced funding of $70.1 million to “ensure that ASIC is the tough cop on the beat, the tough cop that all Australians need,” in the words of the Kelly O’Dwyer. Readers will recall that ASIC was going to be a “tough cop on the beat” back in 2016 when the government gave it $120 million in an unsuccessful effort to hold off a royal commission (not that there’s much evidence that ASIC has upped its game in the last two years).
That was after the government had cut ASIC’s budget by tens of millions of dollars and hundreds of staff a year in its first two budgets. It cut funding in this year’s budget by nearly $30 million. Even with the extra Tough Cop On the Beat™ 2016 funding, ASIC’s staff is still around 100 less than in 2013.
Part of today’s funding is so ASIC can deploy tough cops into large companies to identify wrongdoing. This, at least, reverses ASIC’s traditional approach, whereby people from the big banks and large corporations have been “seconded” to ASIC to undermine its regulatory activities.
It’s an idea that’s suddenly in vogue. Last week Treasurer Scott Morrison seized on a recommendation in the Productivity Commission’s financial system report for “Principal Integrity Officers” to be appointed by the big banks “to be obliged by law to report directly to their board on the alignment of any payments made by the institution with the new customer best interest duty. The PIO would also have an obligation to report independently to ASIC in instances in which its board is not responsive.”
The PC made a number of other recommendations. It wants the ACCC added to the Council of Financial Regulators as a “champion of competition”, in part a recognition the ACCC is a far more effective consumer protector than ASIC. It wants trail commissions banned and all bank staff involved with loans or financial advice to have a legislated “best interest” obligation to customers.
These look very much like an institution devoted to the maxim that more competition and less government interference are best struggling to cope with an oligopolistic industry at the heart of the economy that has exerted its power to protect itself and its ability to gouge customers. Hence the combination of more regulation, the insertion of de facto regulators while promoting more competition — which, in banking, can rapidly turn into dangerously low lending standards
It’s no wonder the idea of a PIO excited Morrison. It’s easy, gesture politics without really doing anything. How many bank executives would put up their hands to be a PIO, to take on the role of making yourself the most hated person in the bank? Not exactly a career-booster, except that you’d need someone highly experienced, who knows all the tricks and where the bodies are buried inside a large company, to even stand a chance of being effective (and be paid a lot of money for taking on the risk and responsibility).
But if a PIO is a good idea for the big banks, surely it’s a good idea for our political parties? After all, our political parties are crucial to the functioning of our democratic system, as banks are to the functioning of the economy. But like banks, they have been poorly regulated with an ineffective regulator, with scandal after scandal and continuing evidence of a problematic culture inside politics undermining community trust in politics, just as community trust has been undermined in banks.
So let’s put PIOs into political parties: the Liberals, Labor, the Nats and the Greens would all appoint a PIO who would have full access to the entire party and parliamentary organisation — cabinet, shadow cabinet, parliamentary offices, the organisational wing, the lot — to see if the best interests of voters were being observed. And they would report to the parliamentary leader. If the parliamentary leader was “not responsive”, they would report to the Electoral Commission. The PIO idea had “potentially far greater application than recommended”, Morrison noted last week. Absolutely right, Treasurer — politics is the first place to start.
Crikey is committed to hosting lively discussions. Help us keep the conversation useful, interesting and welcoming. We aim to publish comments quickly in the interest of promoting robust conversation, but we’re a small team and we deploy filters to protect against legal risk. Occasionally your comment may be held up while we review, but we’re working as fast as we can to keep the conversation rolling.
The Crikey comment section is members-only content. Please subscribe to leave a comment.
The Crikey comment section is members-only content. Please login to leave a comment.