Powered by MOMENTUM MEDIA
Broker Daily logo

ANZ accused of being ‘in bed’ with ASIC

A federal MP has accused the major bank of striking agreements with the corporate regulator to avoid admitting wrongdoing.

Appearing before the House of Representatives Standing Committee on Economics, ANZ CEO Shayne Elliott and deputy CEO Alexis George were questioned by Greens MP Adam Bandt over the timeliness of the bank’s admission of guilt in relation to fees charged by ANZ for no service.

Mr Bandt pointed to an agreement between ANZ and the Australian Securities and Investments Commission (ASIC), signed prior to the commencement of the financial services royal commission, in which the bank failed to admit wrongdoing.

“In the context where you can say today that what you did, the charging of fees for no service, was unquestionably wrong and where ASIC is pursuing you for two years, you sign an agreement with ASIC on the verge of the royal commission conducting hearings and, in that agreement, you’re not even prepared to admit that what you did was wrong; you just say that ASICs concerns were ‘reasonably held’ — it invites the inference that you dont take ASIC seriously at all,” Mr Bandt said.

==
==

The MP alleged: “You are in bed with ASIC. You strike a deal with them that does not include any admission of wrongdoing, and it takes a royal commission to get you to say that you were wrong.”

In response, Ms George said that by the time the bank signed the enforceable undertaking, it had almost completed remediating affected customers.

Ms George added: “[Clearly,] wed admitted that wed done wrong, because wed been in the process of giving the customers back those fees, and we were in the process of making sure that we got it right for the future.

“I think wed been working on that for many years before we got to the point of the undertaking being signed, and wed been given constant updates through ASIC throughout that whole period.”

Mr Bandt then pointed to comments made by Commissioner Kenneth Hayne in his interim report, in which he was critical of ANZ’s agreement with ASIC, stating that the bank paid $50 million in remediation to affected customers but did not admit fault.  

The MP continued: “You are in bed with ASIC and you do not fear them at all, and you know that you can string out an investigation for a couple of years and sign an agreement that involves no admission of wrongdoing.

“[Then] its only when someone calls you to account in the form of a royal commission that you put your hand up [and] say, ‘Yeah, we were wrong’. That is an unacceptable. That is an unacceptable way to regulate your industry. Dont you agree with that?”

Mr Elliott replied: “No, I dont agree with that. With respect, we have said we were wrong. Perhaps its not written down in an enforceable undertaking, but weve said weve been wrong; weve said that many times.

“The allegation that were somehow in bed with ASIC doesnt bear scrutiny from my perspective. We do, using the terms that have been put here, ‘fear ASIC. Nobody wants to get an enforceable undertaking; nobody wants to have regulatory action against us. Its caused us damage, harm. Its embarrassing; its wrong. I accept all of those things.”

In his interim report, Commissioner Hayne was critical of ASIC’s enforcement of the financial services sector, claiming that the regulator “has almost always sought to negotiate what will be done” in response to misconduct.

The commissioner acknowledged ASIC’s use of its banning powers but criticised the regulator’s limited use of court action against embroiled entities.

“Rarely has ASIC gone to court to have the defaulting party penalised. The criminal prosecutions that have been brought have all been directed at individuals. Civil penalty proceedings have seldom been brought,” Commissioner Hayne said.

Commissioner Hayne accused ASIC of too often entering negotiations with accused parties, which go on to settle an issue through the payment of a financial penalty without having to make an admission of guilt.

“ASIC has issued infringement notices. But by paying the infringement notice, the entity makes no admission. It is not taken to have engaged in the relevant contravention,” Commissioner Hayne continued.

“Yet, ASIC and the Commonwealth are prevented from starting a civil or criminal proceeding in relation to the contravention that caused ASIC to issue the infringement notice.”

In response to the report, ASIC chair James Shipton acknowledged the commissioner’s concerns.

“ASIC notes the report’s serious and important observations of ASIC’s role as a regulator,” Mr Shipton said.

“ASIC will carefully consider these observations, as well as the broader findings in the report, and will respond fully in its submission by 26 October 2018. 

“ASIC will continue to assist the royal commission and to work with the government, the Parliament and other regulators to build a stronger legislative, enforcement and regulatory framework with tougher penalties.”

 [Related: RC report slams ASIC response to misconduct]

More on Lender
09 December 2024
The major has announced who will be taking over the role in the new year.
09 December 2024
Loanworks make customer engagement a priority with the appointment of Greg Phillips.
05 December 2024
In this episode of Business Accelerator hosts, Alex Whitlock and Jason Back analyse the factors that make a ...