Poacher turned gamekeeper’s gamekeeper: former bank boss to lead ASIC review
The federal government has appointed Nicholas Moore, former CEO and Managing Director of investment banking giant Macquarie Group, as the first Chairman of the newly formed Financial Regulator Assessment Authority.
The Authority was formed in response to criticism by the Hayne Royal Commission that financial services regulators were being too soft on misconduct. Moore’s first task will be reviewing the effectiveness and capability of ASIC, as well as APRA.
The appointment means Moore has come full circle, transitioning from the regulated to being the regulator’s regulator. But there is a bit more to it than just that.
Moore ran Macquarie for over a decade before stepping down in 2018. During that time, Macquarie had several high profile run-ins with ASIC due to some serious and systemic misconduct.
One example was Macquarie’s lending to customers of Storm Financial, whose “double gearing” business model involved “mum and dad investors” borrowing money against their home to speculate on shares using margin loans. The scheme imploded spectacularly following the GFC sharemarket crash, with thousands of customers losing hundreds of millions of dollars. This prompted class actions as well as ASIC proceedings against Macquarie and others. Macquarie were alleged to have breached contracts and engaged in unconscionable conduct.
Ultimately, Macquarie under Moore’s leadership reached huge financial settlements with ASIC and the class actions, paying tens of millions of dollars in compensation to avoid Court judgments against it.
The Hayne Royal Commission heavily criticised ASIC’s enforcement approach during this period, saying ASIC’s starting point appears to have been “How can this be resolved by agreement?”. It is therefore curious that the federal government has appointed the former bank boss who brokered those agreements with ASIC from the other side of the table, appearing to take advantage of ASIC’s approach, to review its effectiveness and capability.
It might suggest he will be inclined to review ASIC through a ‘business facilitative’ lens, in particular in light of the rhetoric emanating from the Commission. But it could mean the opposite – his insight into how the regulator is approached in such matters giving a hard edge to his review.
Regardless, Moore’s review of ASIC will also be the first key test for newly appointed ASIC Chairman and former Deutsche Bank General Counsel Joseph Longo, who we wrote about previously here.
Both moves signal the federal government’s keenness for more banking and financial services industry experience, rather than career regulators or bureaucrats.
Anthony Jensen, Senior Associate, Mackay Chapman
