ASIC has presented a number of investment banks with the results of a benchmarking study into culture and conduct in an effort to raise industry standards.
Ten members of the ASIC leadership team appeared before a parliamentary joint committee public hearing this month to answer questions about the culture and practice of the big Australian banks.
ASIC chairman Greg Medcraft said the regulator is tackling poor cultural practices within the banks on a "number of fronts" – starting at the board level.
"We’re having very frank discussions with them to tell them what we’re seeing on the front line, and where we see real issues of culture for particular divisions," he said.
"We're sharing it with them and telling them: 'You have a problem here'. And often they don’t know they have a problem. It’s giving the benefit of constructive feedback."
Asked for an example of the work the regulator is doing with the banks on their culture, ASIC commissioner Cathie Armour said her organisation has undertaken a study with a number of investment banks.
"We’ve asked them to respond to a model that we’ve created which identifies a number of key elements of culture and conduct metrics," she said.
The study looked at the way each bank is currently measuring poor conduct with its organisation.
"We’ve collated the results of our info collection and provided that to each of the banks that participated in the study," Ms Armour said.
"[We've supplied them] with benchmarking information so they can see how their practices compare with what might be better practices in the market."
Asked about specific poor cultural practices that have been uncovered, Ms Armour pointed to poor supervision within the banks.
"We’re concerned that they’re not just relating to an individual, but may be a function of poor supervision in an organisation," she said.
"We may see things at a very basic level like poor record-keeping, which seems again to suggest some supervision issues, because the organisation is not in a position to see how business is being conducted."
ASIC deputy commissioner Peter Kell referred to explicit problems with culture cited in the regulator's enforceable undertaking with Macquarie.
"That goes to matters including failure to breach report, failure to follow-up with problems internally that have been identified, and failure to adequately resource or empower compliance areas," he said.