ASIC's shift in focus: from Culture to Care.


The appointment of James Shipton to succeed Greg Medcraft as ASIC Chair was interpreted, in some quarters, as a cozy appointment designed to settle a Regulator taking its enforcement role a little too seriously (and being a little too effective).

Despite the quirky aspects of his appointment, and his more measured, more considered approach, the new Chair has signalled an intention to build on aspects of his predecessor's focus on trust and confidence. While Shipton seems to place less emphasis on culture than Medcraft did, he appears even more determined recognising that “…the sustained degradation in trust in the people in finance will eventually start to degrade trust in the financial infrastructure itself. And this would be catastrophic.”

However, as the CEO of Edelman Australia later proved, Trust is slow to build but quick to erode. Unfortunately for Mr Shipton, trust in the financial services sector has been declining for quite some time and, in the wake of the Royal Commission, it is going to be difficult to restore consumers' confidence and trust (particularly when consumers don't trust the industry, the government or the media).

However, Mr Shipton's approach is more nuanced than it initially appears. While Participants spoke about trust, the Chair spoke about Trustworthiness and aligned the Participants around the reality that Trust needs to be earned through continuing, and continuous, actions. 

In his address, Mr Shipton referred to the CFA Institute and their three factors of trustworthiness (Competence, Care and Ethics). He seems to have internalised these principles and arrived at the conclusion that Professionalism is the combination of competency and conscientiousness built on a "whole and undivided commitment" to care and ethics. These values are reflected in his firm support for FASEA

Mr Shipton, echoing the Government's emphasis of Banks' Social Obligations, highlighted the need for the industry, the licensees and executives to "understand they are there to serve the community and that they are dealing with other people’s money.”

ASIC of course, will play its part in this but he emphasised the importance of self-regulation or, as he expressed it, the opportunity to "lead without the imposition of a regulatory catalyst".

There is also strong speculation that the government wants to shift the focus of ASIC to more direct and constructive engagement with consumers, businesses and organisations. In some circles, the appointment of Mr Shipton brings a promise to ‘roll the sleeves up’ and “improve their organisational dynamics and culture”. 

Time will tell whether the new Chair can maintain his academic reservation in the face intransigence, inactivity and obstructionism but the wind is at his back; the Minister (and the Government) are driving some significant reforms designed to transform the Industry, the Royal Commission is doggedly pursuing misconduct and the Banks are abandoning their usual reactionary responses and reconsidering (the value of) their traditional vertically-integrated model.

We're certainly experiencing interesting times in financial services. I hope it turns out to be a good experience for consumers, advisers and the small businesses that are so critical to our financial services industry.