The Australian Securities and Investments Commission (ASIC) will consider taking action against the Commonwealth Bank over mis-selling of consumer credit insurance, while conceding it has responded too slowly.
ASIC has been waiting on results from an independent review on the Commonwealth Bank issues, which was completed in September. A referral was made to the enforcement team late last month, Chairman James Shipton told the Hayne royal commission today.
“As I understand it, that independent review will form part of the evidence as a part of the investigation,” he said.
Counsel Assisting Rowena Orr noted the delay on enforcement action had extended back years and questioned why ASIC hadn’t started its investigation after receiving notification from the bank about issues in May 2015.
“It was, according to your statement, about a month ago, on October 22, nearly two and a half years after the notification by CBA and months after the matter was examined in the public hearings in the royal commission, that your enforcement team accepted that referral,” she said.
“That’s correct,” Mr Shipton said.
The royal commission heard this week that the bank kept sellling the products for years after becoming aware of potential problems. The company is still completing a remediation program and a report by consultants EY has found more cases that may require action.
Mr Shipton, who took up his five-year tenure at ASIC in February, says the regulator focused initially on customer remediation measures, and mis-selling issues are also seen as an industry-wide challenge.
“It was a mistake not to give enough consideration to commencing an investigation at a commensurate time to the notifications and the awareness of the issue, and to run an investigation in parallel with the remediation program,” he said.
“If this matter or those facts were to present themselves today, then the processes and the questions that would apply would most likely trigger the commencement of an investigation.”
Mr Shipton also said ASIC made a mistake in not earlier pursuing anti-hawking law breaches by life insurer ClearView as a criminal matter. Instead it had focused on stopping the pressure selling tactics.
ASIC’s choice of cases to pursue was also hampered by resourcing and its relatively small enforcement team, he said.
Since the royal commission hearings began ASIC has reconsidered taking criminal action against life insurer ClearView, but has had to consider the effect of terms previously reached with the company, the royal commission heard.
“It was a mistake not to pursue an action of this seriousness in relation to a financial institution,” Mr Shipton said. “That is yesterday’s mindset. That is not the mindset that exists today.”