Funding for the banking Royal Commission has been taken the budget for enforcement, a senior Government Minister has revealed.
Steven Ciobo, Minister for Trade, Tourism and Investment, was speaking with RN Drive. Asked if had any regrets in light of testimony at the Royal Commission, the Minister answered “no”.
“We were taking action. There was funds that instead of going to a Royal Commission were going to be spent on enforcement of standards. And everything comes with an opportunity cost,” he said.
Members of the Government are attempting to defend their previous opposition to a Royal Commission, while also claiming credit for setting up the Commission.
In the past I argued against a Royal Commission into banking. I was wrong. What I have heard is so far is beyond disturbing.
— Barnaby Joyce (@Barnaby_Joyce) April 18, 2018
In 2016 Treasurer Scott Morrison said a banking Royal Commission would be a “populist whinge” that would undermine confidence in the banking system. Minister for Revenue and Financial Services Kelly O’Dwyer said a Royal Commission would be a “talk-fest” only months before the Government announced it would establish the Commission.
The Treasurer has now announced that Government will increase the penalties for corporate misconduct and boost the powers of ASIC. This includes increasing penalties for the “most serious criminal offences” under the Corporations Act and expanding the range of contraventions subject to civil penalties, which will also be increased.
“In addition, ASIC will be able to seek additional remedies to strip wrongdoers of profits illegally obtained, or losses avoided from contraventions resulting in civil penalty proceedings,” said a joint statement by the Treasurer and Minister O’Dwyer.
ASIC will also have an expanded ability to ban individuals from a role in a financial services company and cancel financial services licences where the licencee is not fit or proper.
The Financial Services Council (FSC) – the lobby group for large financial institutions – said it welcomed the increased penalties.
“There is no place for criminality in the financial services industry and wrongdoing should be met with the full force of the law,” said FSC CEO Sally Loane.
“It is entirely appropriate that penalties for civil and criminal misconduct are as strong as possible.”
Shadow Minister for Finance Jim Chalmers said Labor supports tougher penalties for wrongdoing , but “we just don’t trust the Liberals to do it properly”. He pointed to attempts by the Government to “dismantle” Labor’s FOFA reforms, which the Government called “streamlining”.
The announced increase in penalties and powers come from the ASIC Enforcement Review Taskforce Report, which was released at the same time. The report was given to the Government in December 2017.
The Government agrees with, or agrees in principle with, the 50 recommendations in the report, but action won’t be taken on 20 of these recommendations until the Royal Commission gives its final report.
The Royal Commission is due to give an interim report by 30 September 2018 and a final report by 1 February 2019. However the Government appears open to extending the Commission, provided it is requested by Royal Commissioner Justice Kenneth Hayne.
In one case study before the Royal Commission this week, a couple sought advice from Westpac about buying a bed-and-breakfast for their retirement, which they would live in and run. Following from the advice they sold their home and rolled over their superannuation into a new SMSF, intending to use an LRBA to purchase the property. It was only later, after incurring substantial fees, costs and insurance premiums, that they were told they couldn’t live in the property. Unfortunately the Royal Commission focused on aspects of the case other than how this SIS Act compliance issue wasn’t flagged earlier.