Former ASIC chairman James Shipton says it is too hard to sack commissioners (

Updated: Apr 3

Former Australian Securities and Investments Commission chairman James Shipton says ASIC commissioners are immune from the rules of ordinary employment and should be subject to greater oversight and more easily dismissed.

Mr Shipton’s scathing submission to a parliamentary inquiry into ASIC’s performance comes as the regulator’s leaders will be hauled back before a key Senate committee on Wednesday.

One of the ASIC commissioners who will appear before the committee, chairman Joe Longo, will have to respond to allegations he misled parliament when he indicated there had been “no adverse findings” from a Treasury inquiry into ASIC deputy chair Karen Chester.

The Economics Legislation committee, chaired by Labor senator Jess Walsh, will question ASIC on revelations that an investigation into Ms Chester’s behaviour found that while there was an “insufficient basis” to take formal steps to remove her, her alleged conduct could be “wholly or partially substantiated” and might be in breach of ASIC’s code of conduct.

The Australian Financial Review revealed last week that Mr Shipton was one of several ASIC staff to lodge a complaint against Ms Chester that related to allegations of “disrespectful and contemptuous” conduct, including one incident between the pair in ASIC’s Canberra office in early 2021, alleged to have involved “shouting” and “door slamming”.

Deputy committee chairman, Liberal senator Andrew Bragg, said the revelations made ASIC a “laughing stock”.

“Clearly they have big questions to answer,” he said on Tuesday.

ASIC said in a statement last week: “ASIC categorically rejects any claim that the evidence presented to Senate Estimates was not provided in good faith.”

In his submission to the inquiry lodged on Tuesday, Mr Shipton says the statutory appointment of ASIC commissioners for fixed terms by the governor-general based on the advice of federal cabinet is “deficient”.

“Unlike other ASIC staff, who are governed by employment contracts that ... incorporate codes of conduct, commissioners do not have employment contracts. It is also unclear, as a matter of employment law, to whom commissioners, deputy chairs, and chairs ‘report’ to,” he says.

The former chairman said that because the governor-general was the only person empowered to terminate ASIC commissioners, by convention they would do so only on the recommendation of federal cabinet.

“Unlike ordinary employees who, by virtue of their employment contracts, can be terminated for a code of conduct breach, commissioners can only be terminated by the Governor-General for statutory ‘misbehaviour’. This ‘misbehaviour’ needs to be extremely serious, such as a criminal, or near criminal, act,” his submission says.

Mr Shipton recommends the government establish an independent federal body, free of political influence, to oversee the conduct and performance of ASIC commissioners. He says that would protect against a commissioner being unfairly pressured to step aside due to a charged political campaign.

Mr Shipton and former deputy chairman Daniel Crennan, KC, were cleared in 2021 of claims of misconduct over their expenses. Both voluntarily agreed to leave the regulator.

Mr Longo was appointed last year by former treasurer Josh Frydenberg for a five-year term.

Mr Shipton also repeated his call for ASIC to be broken up and for the regulator’s enforcement duties to be spun out into a new agency. That was a proposal that was previously considered by the Morrison government after it was raised in the final recommendations of the Hayne royal commission.

Only 1pc of complaints investigated

Mr Shipton also says that “ASIC lacks clear strategic objectives and performance benchmarks for its enforcement work”.

That claim is backed up by another submission by economist John Adams, whose report helped to trigger the investigation into ASIC’s performance.

His analysis shows that reports of alleged misconduct submitted to ASIC have close to a 1 per cent chance or less of being officially investigated.

Mr Adams’ report, which considered a 10-year period from 2011 to 2021, says that from a total of 134,542 reports of alleged misconduct made to ASIC, only 1709 were officially investigated, or 1.27 per cent.

“ASIC is failing to perform any adequate assessment of reports of alleged misconduct to the detriment of the Australian public interest and the administration of justice,” his submission says.

Mr Longo and the other ASIC commissioners will have the opportunity to respond to the various allegations when they appear before the Senate committee.

By: Patrick Durkin is Melbourne bureau chief and BOSS deputy editor. He writes on news, business and leadership. Connect with Patrick on Twitter. Email Patrick at