Don't know, but get the impression from todays article in the Australian "ASIC turns on a dime, backing Kenneth Hayne’s loathed EUs" that the ISX disclosure issues occurred at the worst time with respect to ASIC's zero negotiation strategy at the time.The dramatic impact of the financial services royal commission on ASIC is now apparent, after Ken Hayne schooled the conduct regulator in his final report that public denunciation helped deterrence and a “why not litigate” approach would help it earn some basic respect.
In the two years leading up to publication of the February 2019 report, ASIC inked 45 court enforceable undertakings.
Hayne loathed EUs, saying negotiation and persuasion, without enforcement, “all too often leads to the perception that compliance is voluntary”.
ASIC’s reversal was so abrupt it induced whiplash.
In the two years since the final report, there’s been a grand total of three EUs, including a doughnut for the June 2020 financial year.
The policy flip did not go unnoticed, particularly in the legal community.
A senior commercial lawyer says ASIC was so shell-shocked after its mauling in the royal commission that it was “incapable of exercising an independent discretion”.
“They were so shit-scared of the commission that it became impossible to negotiate an outcome,” he says.
“It’s only now that the dial is starting to move back.”
The truth is that ASIC’s mandate varies according to the political climate.
Despite voting against the financial services royal commission 26 times, as the Labor Party is fond of pointing out, Scott Morrison finally backed it in when the momentum became unstoppable.
The terms of reference specifically targeted bank misconduct, creating a thirst for retribution and a focus on ASIC’s perceived shortcomings as a “tough cop on the beat”.
Then-chairman James Shipton dialled up the aggression, only to encounter judicial independence instead of Team Australia in the Westpac responsible lending case in the Federal Court.
When Covid-19 arrived, the political momentum shifted again.
Josh Frydenberg, who had accepted Hayne’s final report in an awkward made-for-TV moment, offered the banks an olive branch in return for supporting the nation’s economic recovery from the pandemic.
The banks fell over themselves in the rush to accept, restoring the reputation they had shredded in the royal commission by agreeing to $280bn in deferred loans.
The remaining issue of ASIC’s legacy enforcement policy was resolved last Friday, when new chairman Joe Longo appeared before a joint parliamentary committee.
In a repudiation of Hayne which would have incited rebellion a couple of years ago, Longo effectively consigned “why not litigate” to the graveyard of corporate mission statements and mantras.
It was a useful concept, he said.
“But I think we all need to be reminded that what we’re really talking about is active, credible, targeted law enforcement, and to my mind that’s what we’re about and it’s not going to change,” the chairman said.
“No particular mantra is ever going to really capture the subtlety or complexity of what we’re talking about.”
The issue identified by Hayne, according to Longo, was ASIC’s culture of “reaching for agreements”.
“I think the answer to that is again clear – not every matter is going to end up in court,” he said.
“There will be times when we will not take any action because the matter doesn’t warrant it, but for those of us who have been around for a while, launching court proceedings brings with it litigation risk and cost.
“Occasionally we will settle matters and very often those matters will be court-based outcomes and occasionally we may very well go back to enforceable undertakings if that’s in the public interest.”
In other words, EUs are back.
