ASIC appeared before the House of Representatives Standing Committee on Economics on Thursday, 14 September, where chairman Greg Medcraft was asked by committee chair David Coleman MP if he was concerned about CBA’s conduct in light of the recent AUSTRAC money-laundering allegations.
Mr Medcraft explained that he met with CBA chair Catherine Livingstone, as well as the bank's risk committee, just two days before AUSTRAC launched legal action against the group, but there was “no mention of what happened” during their discussion.
Two days later, Mr Medcraft saw the announcement from AUSTRAC. One week after that, he said that Ms Livingstone “called me to apologise”.
“I think timeliness and transparency are the big issues with this,” Mr Medcraft told the committee. “But we are making inquiries in relation to disclosure, directors duties, breach of financial services laws and disclosure in financial statements,” the chairman said. “We are gathering very large amounts of evidence.”
The ASIC chairman, who will step down from his position in November, said that there is no timetable for regulatory action, telling the committee that the success of ASIC’s work with CBA “depends on their level of cooperation”.
Later in the hearing, Mr Medcraft answered questions from Queensland Liberal MP Scott Buchholz.
“With CBA there is a fair bit on,” Mr Medcraft told him.
“There are lots of skeletons?” Mr Buchholz asked.
“Yes,” Mr Medcraft replied.
BEAR regime a good starting point
Part of the federal budget measures announced earlier in the year included beefing up APRA and ASIC’s powers.
On 7 September, Treasury released the sixth position paper of the ASIC Enforcement Review Taskforce, which concerns ASIC's power to ban senior officials in the financial sector.
Minister for Revenue and Financial Services Kelly O'Dwyer said that the proposed ASIC powers would complement APRA's proposed powers to remove banking executives from their positions (or adjust their remuneration) under the Banking Executive Accountability Regime (BEAR).
ASIC’s Mr Medcraft told the parliamentary committee last week that BEAR “is a very good starting point” but is part of a “journey” on ongoing regulation similar to what has been implemented in the UK.
He explained that the accountability regime will require management to demonstrate that they took reasonable steps to stop something going wrong, as opposed to pleading ignorance.
“I do think we are at a starting point. But I think it is part of a journey.”
[Related: CBA could face $966bn in penalties]