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ASIC wants to embed agents within major banks

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Tim Stewart 6 minute read

New ASIC chairman James Shipton is asking the government for additional funds to embed staff within the big four banks to monitor culture and compliance.

At a public hearing of the House of Representatives Standing Committee on Economics on Friday, Liberal MP Trevor Evans asked ASIC chairman James Shipton about an ASIC proposal to “embed” its agents within financial institutions.

Under the proposal, ASIC staff would monitor the culture and compliance of the major banks from within rather than at a legalistic “arm’s length” setup — a proposal Mr Evans endorsed.

“It’s a style of collaboration which would be less legalistic, quicker and much more efficient in the use of regulator resources instead of arm’s-length legal tussles,” Mr Evans said.


“It would hopefully, with the cooperation of a lot of businesses, tease out the non-compliance that sits there in a non-deliberate, minor, systemic sort of way.”

In response, Mr Shipton acknowledged that ASIC has approached Treasury about the matter, saying that there is a “productive conversation” underway.

The ASIC chairman said that by embedding his staff in the major banks, the regulator’s supervisory teams would become “more knowledgeable and understanding of particular institutions” and have a more “real-time” assessment of emerging risks, both financial and non-financial.

“We will be better able to be honest and speak back the same language the financial institution uses so as to get effective change,” Mr Shipton said.

However, the “embedding” idea does not come without its risks, the chairman said, primarily among them the notion of “regulatory capture”, whereby ASIC staff could become complicit in the poor cultural or compliance practices of an institution.


“We have been very mindful of the experiences of overseas supervisors in this regard,” Mr Shipton said.

“There are a number of lessons to be learnt and to be aware of such as the risk of regulatory capture, which I am very mindful of.”

The Liberal MP questioned whether ASIC required extra funding to carry out an “embedded” function.

“This could be core regulatory business and I think that ASIC already does have all the powers and authorities to enter into agreements and MOUs with businesses,” Mr Evans said.

ASIC wants to embed agents within major banks
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James Mitchell

James Mitchell

James Mitchell has over eight years’ experience as a financial reporter and is the editor of Wealth and Wellness at Momentum Media.

He has a sound pedigree to cover the business of mortgages and the converging financial services sector having reported for leading finance titles InvestorDaily, InvestorWeekly, Accountants Daily, ifa, Mortgage Business, Residential Property Manager, Real Estate Business, SMSF Adviser, Smart Property Investment, and The Adviser.

He has also been published in The Daily Telegraph and contributed online to FST Media and Mergermarket, part of the Financial Times Group.

James holds a BA (Hons) in English Literature and an MA in Journalism.



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