Australian Securities and Investments Commission (ASIC) Chairman Greg Medcraft says company culture is set to become an area of interest for the regulator.

“It is a sad fact that bad culture leads to bad conduct, and this inevitably leads to poor outcomes for consumers,” Mr Medcraft told a Senate economics committee.

He says a positive culture is essential to maintaining consumer trust.

“Areas we are planning to target are those where poor practices may increase the potential for poor conduct, and therefore increase the risk to investor and consumer trust and confidence.”

ASIC plans to incorporate culture into risk-based surveillance reviews, and to use its surveillance findings to understand how culture drives conduct among companies.

Culture is addressed in the Corporations Law and the Commonwealth Criminal Code.

Under the criminal code, a company can be responsible for a breach of certain Commonwealth laws if its culture encourages or tolerates the breach. The code defines culture as an attitude, policy, rule or course of conduct or practice.

“We think the same offence should be able to be actioned by ASIC in the civil courts, just like we can do now for other market misconduct,” Mr Medcraft said.

ASIC has appointed St James Ethics Centre Executive Director Simon Longstaff to its external advisory panel.