Thoughts on engaging with Australian regulators

I thoroughly enjoyed the robust and respectful engagement during the panel discussion with ASIC Commissioner John Price, Non-Executive Director Leah Fricke, Professor School of Law UNE Michael Adams, and GIA's General Manager Policy & Advocacy Catherine Maxwell at the Governance Institute of Australia’s 2019 National Conference yesterday.

It was genuinely one of the best sessions I’ve attended in recent years, so thank you all for your candid perspectives. The extent of factors faced by today’s Board Directors, and the stakes involved, have never been greater. Therefore, a chance to reflect on how we should be engaging with Australia’s regulators is important.

Some take-aways:

·      Should the rules of engagement with our regulators have changed post the Hayne Royal Commission into Financial Services? In many ways they should not have, but in reality they have. There’s been clear signalling that Australian regulators have the resources, the technology and community mandate (and, in fact, expectation) that they will use their regulatory tool box in a disciplined and public way to ensure strong accountability and deterrence. 

·      In terms of ASIC’s “why not litigate” approach – this is a procedural discipline that ASIC undertakes if they form the view that there is sufficient evidence there is likely to have been misconduct, and if it’s in the public interest to take proceedings, then they will ask themselves “why not litigate” (as opposed to a negotiated outcome, or regulatory enforcement).  ASIC’s rationale is that it’s very important that misconduct does not become a cost of doing business. Public deterrence will hopefully go some way to avoiding, or at least discouraging, misconduct.

·      Despite the above, on a human side, our regulators are people. Be thoughtful with how your organisation engages, and the positions it takes. Do not miss out on the opportunity for your engagement to be proactive and for there to be (hopefully two-way) open and constructive dialogue. 

·      No one regulator is the same. Each of Australia’s regulators – ASIC, APRA, ACCC, ATO, AUSTRAC, FASEA etc – has different histories, responsibilities, policies and engagement models.  Australian corporates need to ensure that their engagement model is fit for purpose, both for their organisation, but also for the regulator they are dealing with.  

·      Organisations need to think about regulator engagement in a proactive, not reactive, way.  A good relationship with a regulator can absolutely be a competitive moat.

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