Australian Securities and Investments Commission (ASIC) Chairman James Shipton warns businesses that fail to co-operate with the regulator face a tougher response under a crackdown on misbehaviour.

“It is a professional obligation of financial institutions to be timely, open and honest in their dealings with regulators,” he told a parliamentary joint committee today. “If institutions lie, or are otherwise dishonest with us, we will use every power available to us to punish that behaviour.”

Mr Shipton says ASIC is still experiencing slow responses from institutions, and in some cases deliberate delaying tactics.

ASIC drew fire in the Hayne royal commission’s interim report for favouring negotiated agreements over public denunciation and punishment for wrongdoing.

The report also criticises the regulator for issuing infringement notices with small penalties, rather than pushing for higher fines through courts.

Mr Shipton told the Joint Committee on Corporations and Financial Services it is vital Parliament passes proposed legislation to enhance ASIC’s powers and allow it to pursue higher penalties.

“I am a firm believer in the importance and effectiveness of court-based enforcement tools. They are the foundation of any regulator.”

He says an analysis of court-based enforcement should also consider processes, timeliness, cost and likely success, especially for remediation.

Mr Shipton says a discussion is needed on ASIC’s size and resourcing, given community expectations and the challenges of Australia’s financial system.

“For me, my experience as a regulator in Hong Kong, in a system that also has an industry funding model, is instructive,” he said.

“There, on an adjusted basis, in terms of financial services GDP and financial services population, Hong Kong’s financial regulators are three times the size of Australia’s.”