Since the completion of hearings in the Financial Services Royal Commission late last year, ASIC and APRA have commenced a number of governance investigations and initiatives.
APRA has commenced investigations into the conduct of superannuation entities, primarily in the for-profit sector, and has also commenced litigation against IOOF superannuation entities and officers. This marks a material change in the enforcement approach by the prudential regulator.
ASIC has been active on various fronts. It is establishing an “Office of Enforcement” under the direction of Deputy Chair Daniel Crennan, QC, separated from the rest of the regulator’s functions, which is investigating a number of matters arising from the Royal Commission, including 12 direct referrals. ASIC has, in its own words, “adopted a ‘why not litigate?’ enforcement stance and publicly committed to that posture going forward”. ASIC is also well underway with its previously-announced “Close and Continuous Monitoring” programme covering the “Big 4” banks and AMP.
ASIC is pursuing two further governance initiatives. Under the first initiative, ASIC has established a “Corporate Governance Taskforce” to enquire into board oversight of non-financial risk, remuneration of senior executives, and governance disclosures for companies in the ASX100. This programme is not limited to the finance sector. A first cohort of about 20 companies have been contacted by ASIC: we understand that for most the initial focus is on governance processes and frameworks and/or assessment of remuneration of KMPs. ASIC has issued notices for the production of a broad suite of documents. No allegations of misconduct have been made at this stage. It has also requested informal interviews with senior executives. We understand that the Taskforce is proposing to report on the outcome of its enquiries into executive remuneration in August this year.
Under the second initiative, ASIC has also commenced a programme reviewing financial markets activities of investment banks.