The Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry (Financial Services Royal Commission) concluded in February 2019, and exposed rampant toxic culture and endemic misconduct across the sector. While the Australian Securities & Investments Commission (ASIC) incurred criticism, Commissioner Hayne found that primary responsibility for the misconduct and harms uncovered lay with the entities concerned, and their boards and management.
Perhaps not unreasonably the pendulum had swung, and the corporate regulator repositioned itself adopting its ‘Why Not Litigate?’ enforcement posture in late 2018, towards the end of the Royal Commission.
Others are better placed to argue the substance and merits of the mantra, but the explicit emphasis on court-based remedies, while aligned with the post Royal Commission mood and rhetoric, was arguably inefficient and impractical where inflexibly applied. The handling of the ‘wagyu and shiraz’ matter didn’t assist ASIC’s cause and Covid-related public policy challenges and associated economic headwinds, buttressed by the masterful handling of pandemic-related policy and mortgage relief by Australian banks, reshaped the politics and recovered community sentiment. Fast forward to 2021 and the ‘Why Not Litigate?’ posture is a distant echo, ousted by a more pragmatic approach and an explicit commitment to promoting economic recovery, including through better and more efficient regulation, facilitating innovation; and targeting regulatory and enforcement action to areas of greatest harm.
While there are parallels with the leadership, governance and compliance failures revealed in the Australian casino sector (and shades of a similar pendulum lurch towards policy and regulatory intervention, and more intensive supervision of the sector) the counterfactual is often lost in the fray. The economic imperative for integrity in financial services, and business and consumer access to banking facilities and credit is obvious, but the gambling sector’s story has fewer orators, and won’t easily access the redemption secured by the banks deftly navigating pandemic politics and hardship support.
"The malady of over-correction involves blunt policy and artificial expectations"
The Nevada model is instructive on marrying strict regulation and oversight of the gaming sector with recognition of the important economic and social contribution it makes to the state. The Nevada legislature explicitly declares the gaming industry is vitally important to the economy of the state and the general welfare of the inhabitants. It also acknowledges that continued growth relies on public confidence and trust that operators do not unduly impact the quality of life of community, and that gaming is free from criminal and corruptive elements.
The malady of over-correction involves blunt policy and artificial expectations, and is best moderated with countervailing considerations, but might be inescapable given the inattention and disrepair of regulatory settings and political reticence for robust oversight previously.
The extensive leadership, governance and compliance failures uncovered in the Australian casino sector were compounded by money laundering concerns in pubs and clubs; and amplified by the politics of a close NSW State election, a government with many accomplishments, three terms in office, too many barnacles and an abject failure in the gambling portfolio.
Robust policy settings, regulatory leadership and expert industry oversight, buttressed by political support, are necessary to secure industry integrity and underpin public confidence, essential to social licence and sustainability. But discussion of optimal regulatory arrangements are moot if we don’t also have conversations about invigorating industry and facilitating the conditions for sector innovation and flourishing.
Equipping gambling regulators with meaningful sanctions has been a necessary step in building deterrence and corroborating expectations, but the policy discourse should extend beyond enforcement to understand sector conditions, issues and opportunities; and embrace innovation that fosters industry development and growth and rewards ethical leadership.
