The Banking Royal Commission - It's not just about the banks!
Be prepared for a new era of regulatory enforcement
On 4 February 2019, the Government released the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Final Report). Needless to say, many in the banking industry are feeling the heat. But really, it's not just about the banks!
Commissioner Kenneth Hayne has made a number of recommendations regarding regulators and their approach to enforcement including that:
regulators should adopt litigation as the starting point;
regulators should limit the use of undertakings, infringement notices and settlements where appropriate; and
co-regulation and information-sharing should be improved between regulators.
While the Final Report focused on the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA), the Commissioner's recommendations are likely to resonate with regulators across the board, including the Australian Competition and Consumer Commission (ACCC) and the Australian Taxation Office (ATO) in relation to their respective mandates.
A new era of regulatory enforcement
Given the government's current stated intention to adopt all 76 recommendations in the Final Report, a dramatic change to regulatory enforcement seems inevitable - namely, a change that moves away from enforcement through settlements, undertakings and fines, and towards litigation and prosecution.
If you are in business, or a director or officer of a company or an advisor to any business (take note accountants, financial planners, business advisors and the like!) you should review and monitor your legal compliance of your business operations on an ongoing basis.
Depending on the size and complexity of your business, if you fail to take the necessary steps to review and monitor the legal compliance of your business, this can result in adverse consequences including:
extensive investigation and enforcement by a regulator;
litigation by a regulator against the company and the company's directors, officers and advisors;
civil or criminal prosecution (or both);
shareholder class actions; and