Medcraft marks lack of trust
ASIC chair Greg Medcraft says a trust deficit in Australia's financial institutions will drive digital disruption.
Medcraft made the comments at an American Chamber of Commerce lunch this week, saying finance firms must improve their self-reporting of breaches.
“What we've seen in the scandals in Australia with the FX scandals, the BBSW scandals, the insurance scandals, the financial advice scandals, the responsible lending scandals ... where do I start?” he commented.
“We've got some issues and a lot of it at the end of the day doesn't help consumer trust and confidence, and you're not going to regulate your way to that.
“The days of getting away with misconduct, whether its a breach of law or not, are gone.
“I think what companies are realising is certainly you've got to meet your legal obligations, but you've also got to meet society's expectations.”
Mr Medcraft said remuneration drives behaviour, and that values and culture can only be brought forward by an effective board and CEO.
But, he said, Australia does have one of the “cleanest” markets in the world.
“In terms of how people should be remunerated, I wouldn't dare go through that topic,” he said.
The Federal Government gave ASIC a $60 million boost to expand it data initiatives this year.
The funds will pay for enhanced machine learning - using advanced algorithms to match the relationships between people, their money and the companies that hold it.
“In the past we've been using enhanced fuzzy logic word searching capabilities, now what we're experimenting with is enhanced algorithms that actually allows us to map relationships of persons and entities across very large databases,” Mr Medcraft said.
ASIC has also been using the technology to find accounts that dodgy fund managers use to hide their trading behaviour.
“The ability to actually use machine learning to actually scan and come back to identify inappropriate conversations and the mood of the people is actually quite useful,” Mr Medcraft said.
The ASIC chair also reflected on the general financial mood.
“Globalisation and the value of trade in particular has been demonised. We in Australia watch with considerable interest to see how the rhetoric of the campaign trail will play out in new policy settings developed in the United States in particular, but also in Europe,” he said.