BEAR should be expanded, ASIC included: Shipton

ASIC chair James Shipton said he is in favour of applying the Banking Executive Accountability Regime to senior ASIC staff while being quizzed on the regulator's current governance.

After telling Senior Counsel Assisting Rowena Orr that he believes the BEAR should be expanded to also encompass all ASIC regulated entities, Orr referred to the UK Financial Conduct Authority's similar Senior Managers Regime which FCA staff are also required to adhere to.

When questioned whether ASIC would intend to apply the fundamental principles of the BEAR to its own staff in the same way, Shipton said he is minded to do so.

"I am very mindful of what I call hypocritical risks of a regulator. If we expect something of the regulated community, we must be holding ourselves to that same standard," he said.

He then said that he has already asked his team to undertake a review to ensure they are holding themselves to the highest standard of account, "using as a benchmark the standards we expect of others."

Asked who or what body would be charged with ensuring ASIC complies with the regime, Shipton said the best way would simply be for the regulator to ensure it is holding itself to account.

Further, Shipton described such a move as good practice of good governance at which point Orr questioned him on the current governance structure of ASIC.

Outlining that ASIC's leadership currently comprises Shipton as chair, two deputy chairs and four commissioners with executive responsibilities, Orr asked why there are no non-executive members.

This is in contrast to the FCA, the Securities and Futures Commission in Hong Kong, the ACCC, the UK's Competition and Markets Authority and the Reserve Bank, she added.

"There are concerns that I have when I look at the current operational framework and responsibilities of ASIC. That is why I am of the firm belief that out current structure should move to one whereby Commissioners of ASIC do not have day-to-day executive responsibility," Shipton said.

Orr responded: "It would be regarded as poor governance for a large listed entity to have a board comprised entirely of executive directors, wouldn't it?"

"It would be, yes," Shipton replied.

Orr then pressed as to why the inclusion of non-executive members on ASICs governing body wouldn't assist in the good governance of the regulator.

"I'm not ruling that out. What I am saying is that I believe ... the optimal model is full-time Commissioners who do not have executive responsibilities, but are providing full-time strategic oversight, direction and guidance, and challenge the executive group," Shipton said.

Read more: ASICJames ShiptonBanking Executive Accountability RegimeFCARowena OrrUK Financial Conduct AuthorityACCCCompetitionFutures CommissionHong Kong Markets AuthorityReserve BankSenior Managers Regime
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