In the wake of the Hayne Royal Commission hearings and report, Australia’s bank regulators adopted a more aggressive enforcement stance. However, COVID-relief efforts have since mandated that those regulators relax their supervisory agenda and exercise a certain degree of forbearance until we get past the crisis.
The pace of regulatory investigations has slowed, as regulators acknowledged the challenges in this environment that impact businesses’ ability to respond to inquires promptly. But such leniency will soon come to an end, and the key question firms are asking is whether regulators will revert to the fairly combative stance they adopted over the course of 2019.
Early signs suggest that the answer is “Yes.” According to one report, Rod Sims, Australian Competition & Consumer Commission chairman, said that the “five-month litigation drought” would end in the near future and that enforcement would ramp up again in the coming months. ASIC’s chairman James Shipton also stated that ASIC continues to have appetite for high-profile litigation, per its previously announced “why not litigate” posture, and said that “past illegal conduct, including behaviour identified by the Hayne royal commission, must continue to be a priority.”
Firms should thus prioritize developing an ability to evidence successful culture and conduct risk management now, before they face potential investigation. Following on its requirement that firms undertake independent “culture audits,” the Australian Prudential Regulation Authority was critical of the reports it subsequently received.
Earlier this year, APRA Deputy Chair Helen Rowell suggested that an over-reliance on the use of consultants who offered. “Institutions may well wish to use external advisors to facilitate, provide structure or challenge their internal dialogue, however it remains the responsibility of each institution to own and drive its understanding of how accountability works within its organisational structure,” Rowell said.