Australia’s corporate watchdog, the Australian Securities and Investments Commission, has issued a warning to payday lenders and credit card providers – We are watching you.

The warning comes ahead of ASICs intention to restore trust in Australia’s scandal-prone financial system.

Australia’s financial industry (most notably led by financial planners and the Big Four banks) has been embroiled in a series of rorts, frauds, and outright deceptions since the 1980s.

Any and all attempts to regulate the industry have failed (as seen by the opposition to the Future of Financial Advice memorandum.

Now, rather than always reacting to the inevitable breaches, ASIC has determined to take a preventative approach.

Greg Medcraft, the Commission Chairman, told a Senate estimates hearing in Canberra on Wednesday, that ASIC will attempt to monitor the culture of banks and businesses in order to lift customer confidence in the financial system.

“Given there is a strong connection between poor culture and poor conduct,” said Mr Medcraft, ASIC thinks culture is a major risk … in investor trust and confidence, the cornerstone of our financial system.”

Liberal senator Sean Edwards described Mr Medcraft’s opening statement a ‘bombshell,’ but Mr Medcraft demurred, calling it more of a ‘nudge’.

“It’s a warning to everybody,” said Mr Medcraft.

And don’t think this is all bark and no bite.

ASIC is testing the approach in a criminal law case, while also discussing its implementation with the director of public prosecutions. In fact, more than most government bodies, ASIC shown it is ready, willing, and able to back up its words with actions – and show the law applies to everybody.

Mr Medcraft urged borrowers this week to brace themselves for interest rate rises. He coupled this with a message to lenders: “You are not being fair … to borrowers if you are using a rate that is not realistic in the longer term.”

ASIC have also made no bones about their intention to take a ‘close examination’ of credit card interest rates.

But a comprehensive oversight will be difficult with more than 100 providers offering varying products.

Independent senator (and Champion of the people) Jacqui Lambie said the jaw-dropping mark-up on credit card rates made “payday lenders look like charities”.

And who could argue with her?

ASIC have said they will pursue credit providers wherever they are. “Whether you do it (offer credit) physically or you do it online, we will watch and we will take action.”

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