ASIC ‘considering’ Senate recommendations from Sterling collapse report

In a Parliamentary joint committee on Friday (11 February), ASIC chair Joseph Longo responded to the release of the Senate economics references committee’s report into the collapse of the Sterling Group.

Following an inquiry into the Sterling Group late last year – which eventually collapsed in 2019, leaving more than 100 customers facing possible eviction and heavy financial losses – the report stated that the corporate regulator did not act quickly enough and “should have been more proactive”.

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“The unique circumstances and especially the failure of ASIC to act in a timely manner distinguish these victims from just being victims of a lost investment,” senator Malcolm Roberts said in the report.

“ASIC had all the information and power to respond to the complaints. Had ASIC done so quickly, many millions would have certainly been saved. ASIC did not act quickly.”

On Friday, ASIC chair Joseph Longo said ASIC is “considering the report findings and recommendations”, which includes to investigate and, if appropriate, commence legal proceedings against AFSL holders that are alleged to have breached section 917B of the Corporations Act but have not consented to participate in relevant AFCA processes. 

The committee also recommended ASIC develop a framework which would aim to promote greater awareness for retail investors in regards to buying financial products and services.

“We note that ASIC and Treasury already invest a considerable amount in financial literacy and consumer awareness work, including through Moneysmart,” Mr Longo said.

“However we are reviewing the financial literacy material in light of the committee’s report, in particular in relation to supporting consumers having reasonable expectations of the regulatory regime and of ASIC.”

During the inquiries in November, Mr 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.

Shortly after, Mr Longo conceded that ASIC could have acted differently, but refused to apologise for the matter saying it would not be “emotionally inappropriate”.