During a Senate inquiry into the collapse of the Sterling Group on Thursday (18 November), FPA head of policy, strategy and innovation Ben Marshan was asked by senator Louise Pratt if he was aware of the processes of the regulator after it was accused of a delayed response into the matter earlier this week.
“ASIC collects a lot of information from financial services, firms and licensees. Whether or not it actually looks at any of it or considers the risks or takes proactive action based on the information they collect would be the question I would ask,” Mr Marshan responded.
When pressed on the purpose behind ASIC collecting information, Mr Marshan replied: “To be blunt, it’s ticking a box.
“The law requires you to provide a particular piece of information – tick, it’s been provided.
“There’s no consideration of what the answer is. There’s no consideration of if the answer would lead to a higher risk weighting for that particular product or that particular licensee or that particular scheme.
“If all you’re doing is ticking boxes and not looking at the answers, then this is the outcome that occurs.”
In the Senate inquiry which began on Tuesday (16 November), corporate litigator and investigator Niall Coburn – who also previously served as a senior specialist adviser to the corporate regulator – said ASIC failed to protect consumers.
The Sterling First Group eventually collapsed in 2019, leaving more than 100 customers facing possible eviction and heavy financial losses.
Earlier in the same inquiry, ASIC chair Joe Longo conceded that the regulator had received complaints about matters related to Sterling in late 2016, however it did not become officially involved until a referral by the Western Australia Department of Mines, Industry Regulation and Safety in March 2017.
Mr Longo said ASIC did receive “two or three complaints or reports of misconduct… in late 2016, early 2017”, but did not believe further action needed to be taken.
Mr Marshan continued: “It demonstrates the benefit of a relationship with a professional financial planner in understanding the risks of these types of products.
“In terms of the regulator and the way they’re regulating… consumers expect [that] when a product is regulated by the regulator that there is some form of check or some form of quality assessment that it’s fit for purpose for a consumer to invest in.”
In the inquiry, the FPA recommended that all financial products and services should be “compelled to investigate and compensate for misconduct” through the new breach reporting regime and that government’s proposed Compensation Scheme of Last Resort (CSLR) be extended to cover all financial products and services and not just distributors.
I reported a scam to ASIC once. The evidence was plain to see and provided, yet ASIC wrote back to me saying they didn’t have sufficient evidence to confirm it was a scam and wouldn’t take it any further. Just plain lazy and unwilling to chase anything down unless they sniff some revenue potential.
Say it for what it is. ASIC grossly failed in its role. It is clear and not in dispute. So what are the consequences? ASIC’s inaction resulted in client harm. ASIC always seems to find advisers responsible for the smallest of errors or failings. So what now? Who is going to be banned from the profession. Who is going to have civil and criminal penalties to apply?
Seems ASIC staff still get paid and make bonuses without ever having to anything – or take responsibility for not doing anything.
Drain the swamp?
After the appearance of Dante De Gori at the Royal Commission the Commissioner stated that we, the advice industry were incapable of self regulation and peers holding peers to account similar to legal and medical profession. Perhaps the FPA is not the best party to be criticizing others. Two years on, FASEA has been rolled into ASIC and ASIC is now our self regulatory body. The FPA dosen’t represent Advisers they represent all parties in the industry, the bare foot investor included. What’s needed is proper consultation with actual advisers that care about Australians.
It was only a few years ago that the CBA blamed all their problems on “individuals” saying it’s not us it’s those nasty financial planners, and the FPA came out a day later and said Yes they agree, calling for higher education levels and supporting the CBA. Fast forward in time and here we have ASIC being too busy chasing after spelling mistakes in FDS and SOA’s “box ticking” and chasing those “nasty financial planners” and we’re sitting here scratching our heads, wondering why how ASIC can be asleep at the wheel.
ASIC is a failure and it’s a failure because they’ve consulted with parties that have conflicted interests. The FPA have failed cause there trying to represent the entire industry. Planners have failed because we don’t have any representation and are quite happy with that conflict.
One of the most succinct and erudite summaries of the “situation” that I have read.
ASIC were warned many times about Storm = ASIC Did nothing until post GFC total collapse.
ASIC were aware for at least 10 years of Big Bank, AMP, Insto Fees for No Service that is now adding up to about [b]$5,600,000,000 of stolen money[/b] from these Big Insto customers = ASIC did nothing until post RC.
ASIC were warned of Melissa Caddick = ASIC Did nothing until to late again.
ASIC were warned about Sterling = ASIC did……….yep you guessed = NOTHING until too late.
So what were ASIC doing ?
Protecting Big Banks & Insto’s
Promoting anything and everything Industry Super
Killing Real Advisers for the most minor of breaches.
Making False SMSF Cost Fact Sheets.
[b]Something has to change – how did ASIC go so off the rails ??????????????????[/b]
If the lid was lifted on the broader industry on ffns you could multiply the stolen money amount 10 fold. And before you say rubbish are you sure every practice could meet ASICS rule to evidence of an advice document each and every year going back to 2008 for every client? The answer is simply no.
sleepy ASIC, and a snoring government. thanks Ben
I assume this is the same organisation (I’m referring to the FPA) that did absolutely nothing when it came to Storm Financial?
Mr Marshan continued: “It demonstrates the benefit of a relationship with a professional financial planner in understanding the risks of these types of products.”
Now, if only there was a positive, mutually beneficial and respectful relationship between the regulator and the financial advice community…this probably would not have happened.