In his first speech since taking the reigns of Australia’s corporate regulator, new ASIC boss James Shipton says he is looking to regain the trust of the general public.
Speaking at the ASIC annual forum in Sydney, Mr Shipton made it clear that he is focused on all those in the financial services sector that deal with “other people’s money”. It’s clear that Mr Shipton will use his time as ASIC chairman to ensure that the standards within the industry are higher than ever.
Mr Shipton has been chairman of the corporate watchdog since February, taking over the role from former head Greg Medcraft. He has come into the role with more than 20-years experience that included roles at Goldman Sachs and the Hong Kong Securities and Futures Commission.
Regaining Trust
According to Mr Shipton, the “trust gap”, between the general public and the financial services sector has continued to decline in recent years. Marred by high profile banking scandals, ASIC has already bought a number of high profile cases to court in recent years. And it’s the loss of trust in the sector that concerns him the most.
“We are still facing a trust deficit. The trust deficit is something that needs to resolved because if it is not resolved, there is an interdependency between trust in the people in finance, and trust in the infrastructure,” he said
“If there’s too much of a degradation of the trust in the people in finance eventually that will cross over and impact in the trust in the infrastructure and that will be catastrophic.”
As it stands, he believes that the general public doesn’t trust those involved with handling their money.
“The sad conclusion must be that Australians don’t look to people in finance with enough trust. My own personal view is that people don’t perceive they are getting sufficient value and benefit from finance and that this is also at the heart of the trust deficit,” he said.
Getting Over the Financial Crisis
The global financial crisis put the conduct of the banking and financial services sector firmly into the spotlight. The period saw global stocks and real estate fall in value by more than 50%. The blame for much of this fell firmly at the feet of the banking industry and Mr Shipton believes that this has done immeasurable damage to the reputation of the industry.
“It has been 10 years since the global financial crisis, and it strikes me that, too often, we are still going over old ground as we struggle to find solutions,” said Mr Shipton.
“Finance is not ‘just numbers on a computer screen’ or just a means to receive a commission or a bonus. Nor is it just about institutions or companies,” he said.
Key Policy Tools
Despite some of the high profile banking cases that ASIC has brought to court in recent times, Mr Shipton suggests that regulation isn’t the only approach.
He believes that recent policy such as the Financial Advisers Standards and Ethics Authority can help lift industry standards, without the need for further regulatory burdens.
“There is a window of opportunity for the industry to take the lead without the imposition of a regulatory catalyst,” said Mr Shipton.
“I do not exclude myself and my own organisation from the same responsibilities and standards we expect of industry”.
