Regulators ‘have a case to answer’

Speaking to the media, Treasurer Josh Frydenberg questioned whether regulators have effectively held financial institutions accountable for breaches revealed by the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

“[Like] other Australians, I’m appalled by the conduct that has been revealed,” the Treasurer said.

“Namely, fees for no service, fees being charged to dead people, 300,000 alleged breaches of insurance laws while providing unsolicited products.

“This is not what we would expect from our financial services sector, from people who are in a position of trust.”

Mr Frydenberg continued: “At the same time, [the] regulators do have a case to answer because in many cases they were aware of this conduct.

“I am asking the questions as to why they didn’t stamp it out and why they didn’t hold those responsible accountable.”

Mr Frydenberg’s comments follow the release of a report from the Australian Securities and Investments Commission (ASIC), in which it was critical of the “inadequate” compliance systems of the financial services institutions, claiming that they’ve been “too slow” to respond to breaches, and that it is “actively considering enforcement action”.

Following its review of selected financial services groups’ compliance with breach reporting obligations (REP 594), ASIC identified “serious, unacceptable delays in the time taken to identify, report and correct significant breaches of the law among Australia’s most important financial institutions”.

Government could extend RC proceedings

Further, the Treasurer stated that the government would be open to extending the commission’s proceedings at the request of Commissioner Ken Hayne.

“[If] the royal commissioner wants the extra time, then the government will favourably consider such a request.

“[Commissioner Hayne] has done an excellent job to date. He’s been very professional and very focused in the [hearing].”

The commission’s interim report is due to be released by 30 September, with the final report due in February.

[Related: ASIC mulls enforcement amid ‘unacceptable’ delays]