DEBORAH KNIGHT:
In the latest move to keep them honest the big banks will have corporate cops placed permanently within their offices keeping watch around the clock. Minister for Revenue and Financial Services Kelly O'Dwyer joins us from Melbourne.
Minister good morning to you – this is very much a welcome move. The behaviour uncovered by the banking Royal Commission is shocking. Why has it taken so long though?
KELLY O'DWYER:
Well we've got a very new Chairman of ASIC, James Shipton, and he's done a broad strategic review of ASIC and he wants to make sure that it has the powers and the ability to prevent misconduct before it occurs. So he has asked the Government for around $70 million of additional monies over two years to embed corporate cops on the beat in these financial institutions, the big four banks plus AMP, so that they can be more able to prevent misconduct when they see it occurring so that harm is prevented before it becomes widespread.
DEBORAH KNIGHT:
And what sort of powers will they have?
KELLY O'DWYER:
Well we've already announced additional powers for the regulator. We did a big review of the powers. We've got additional criminal and civil penalties, so for instance, if corporate misconduct occurs and the financial institution has profited from that, there are new civil and criminal penalties that would actually strip away the profits that would have been given to the banks or financial institutions in those circumstances, or in fact it could even be ten per cent of the turnover of that financial institution. These are very, very strong new powers and strong new penalty provisions and we're making sure the corporate regulator as well has got the ability to pursue litigation where that is necessary.
DEBORAH KNIGHT:
Well the corporate regulator has clearly been lacking in its abilities to regulate the banks and the insurance industry. Are you confident that ASIC is the right body to be taking up this role?
KELLY O'DWYER:
Well look, the corporate regulator has got a strong record, but it needs to be even stronger. And I think part of the criticism that has happened in the past of the corporate regulator is that they have often turned up well after the event and it's been seen as too little, too late.
DEBORAH KNIGHT:
You yourself have agreed they have been a toothless tiger in the past.
KELLY O'DWYER:
Well, we have put in place strong new leadership at ASIC with a strong new chair of ASIC, someone who has got very deep international regulator experience. We have announced a new Deputy Chair who has got a strong focus on enforcement. We've announced these additional new penalties, we've given them new powers, new resources. We're making sure that ASIC is a very tough cop on the beat and making sure that they are embedded in these financial institutions will prevent misconduct, some of the misconduct of course that we have heard about in more recent times.
DEBORAH KNIGHT:
Now your Government didn't want this Royal Commission in the first place, but the superannuation industry is now under the spotlight and it will be for the next fortnight. Will these corporate cops as they're being called be extended to that sector as well?
KELLY O'DWYER:
Of course I'm not going to comment on the Royal Commission directly. It is an independent Royal Commission, but I would say this, that part of the $70 million is also to enhance ASIC's ability in the superannuation sector as well.
DEBORAH KNIGHT:
So will they be embedded within those industries and within that sector too?
KELLY O'DWYER:
That is obviously going to be a matter for ASIC. They have announced that they want to embed people in the big four banks and in AMP. We will not dictate to the regulator how it needs to use its powers. We will give them the full ability to be able to do that, but we know that it's a $2.6 trillion industry, superannuation, and that every working Australian has got a superannuation account and it is critically important that their money is protected and it's there for them when they retire so that they've got choices in their retirement.
DEBORAH KNIGHT:
We have to get that right, that is for sure. Minister, thank you for your time this morning.