Treasurer Josh Frydenberg has announced ASIC chair James Shipton will leave the regulator in the coming months, despite being cleared by Vivian Thom's review of ASIC Governance.

Releasing the review findings today, Frydenberg said he and Shipton agree it is in the best interests of the regulator for Shipton to leave. He has been in the role for three years.

Shipton will continue in the role from Monday, after having been stood down for the last few months. He will depart once a new chair has been appointed, which is expected to occur in the next three months with the search to commence immediately.

The report was first handed to the Treasurer on December 17, and Frydenberg said Thom made no adverse findings against Shipton or former deputy chair Daniel Crennan. However, Thom did say it was open to Treasury to seek legal advice as to whether Shipton breached applicable codes of conduct and what action could be taken if so.

"After considering Dr Thom's report and supplementary legal advice provided to the Treasury concerning these matters, I am satisfied that there have been no instances of misconduct by Mr Shipton concerning his relocation arrangements, including ASIC's payment for tax advice resulting from his relocation to Australia in early 2018, nor have there been any breaches of applicable codes of conduct," Frydenberg said.

The review concluded that Treasury could improve its processes for managing the appointments of statutory officers and has implemented a new system as a result.

For ASIC, Thom noted issues of concern in relation to the proper use and management of public resources, systems of risk oversight and management, systems of internal control and cooperation between ASIC officials. The regulator is now expected to make a series of changes as a priority and provide regular progress reports to Frydenberg.

The review was kicked off in October 2020 when it was brought to the Treasurer's attention that Shipton and Crennan had both been significantly overpaid. Shipton and Crennan stepped aside pending the outcome of the review.

Shipton's additional payments related to tax advice he received amounting to more than $118,000. While ASIC had agreed to pay for some tax advice received by Shipton, Thom estimated that a reasonable amount to have covered by the regulator would have been around $14,000.

"In the absence of any monetary value in that agreement, there should have been no expectation that the agreement was for an uncapped amount," Thom wrote.

"It is the opinion of this review that any increases after that [$13,666.76] should have been subject to a further consideration as to whether the costs were reasonable and whether a clear ceiling was to be established."

The overpayments to Crennan were in relation to relocation expenses incurred upon taking up his role, but that continued long after he had relocated. Crennan has since repaid the money and resigned from the regulator, taking on a new role at EverBlu Capital.