The major focus of this year’s ASIC Annual Forum centred on rebuilding trust – trust within the financial services sector and the Australian community – and why it is so critical to business.
At its 2018 Annual Forum, the Australian Securities and Investments Commission (ASIC) outlined the major themes under the regulator’s new chair, James Shipton.
Speaking at the two-day forum, Shipton described the need to establish trust in the community and spoke of the current trust deficit in financial services.
“To rebuild trust, we need to re-establish trustworthiness – that is, exhibit competence, care, and ethics,” he said.
Shipton reminded participants of the fundamental purpose of the sector and to remember “it always comes back to people”.
Against the backdrop of the the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry, Shipton raised the issue of poor conduct and the need to improve professionalism across the sector.
“If you put yourself in my shoes – those of a regulator – you would ask yourself ‘why are there so many examples of poor conduct in finance?’
In order to rebuild trust, Shipton spoke of the need for greater professionalism in the finance sector and a commitment to improve. He emphasised that there was a “window of opportunity” for the sector to take the lead, rather than face government regulation.
At the forum, Minister for Revenue and Financial Services Kelly O’Dwyer announced that ASIC, which has faced increased scrutiny over recent years, would be expanding its leadership team through the appointment of a second deputy chair. O’Dwyer said the new role would provide the regulator with greater flexibility to manage the breadth of its new powers and increased responsibilities resulting from recent and upcoming reforms.
The announcement would also bring ASIC into line with the structure of the Australian Competition and Consumer Commission.
Trust in the digital era
The Forum also examined the importance of culture within businesses. Professor of Justice Systems, Christopher Hodges, from the University of Oxford spoke of ethical culture regulation and while it is an essential component of trust, it cannot be guaranteed by regulation alone. He outlined new regulatory models that could build stronger foundations for ethical culture and behaviour in business.
Moreover, the use and management of data and technology was discussed as a major risk to trust. In particular, how to harness the benefits to business while managing the uncertainties and risks that change can bring to financial markets and the broader community.
The ASIC Chair emphasised the complexities of addressing trust in the current environment of rapid digitalisation and internationalisation.
“Rebuilding trust is hard work. It requires all of us to actively engage, especially when it comes to human trust. Equally, maintaining trust in both a human and an infrastructure context requires ongoing attention. This is especially so in a digital age when institutions and companies need to carefully handle personal data and information.”
Diversity crucial to heightening professionalism
Shipton added that exhibiting professionalism is a way of establishing trustworthiness. However, a lack of empathy and lack of care is something that could not be regulated.
He also emphasised why diversity initiatives are crucial to heightening professionalism and that comes from a diverse workforce.
“They are not just nice to have, they are a must-have. And they need to be a core part of your businesses.”
Shipton issued a challenge to the sector, emphasising the need for businesses to move beyond rhetoric to real solutions: “It’s up to you, as leaders and citizens… to expect more of your industry and your colleagues. It’s also very human. It’s something that technology isn’t likely to provide a solution to. It is a challenge that goes to the very heart of the trust deficit.
“We’ve been talking about this problem for far too long.”
Forum attendees were left in no doubt that ASIC would be expecting more from corporations and that the onus is on the business community to rebuild trust in the community.
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