On the same day that ASIC urged advisers to meet the deadline for its new funding model, the royal commission heard how CBA had effectively regulated the corporate watchdog and written its press releases.
ASIC couldn’t have picked a worse day to remind the financial advice industry that they need to pay up for the services of a corporate regulator.
On Thursday, 13 September, ASIC published a press release with the headline ‘ASIC urges organisations to act on industry funding before 27 September’.
ASIC stressed that serious penalties will apply for all those who fail to pay up on time. The sort of penalties that a payday lender, for example, might lash upon its customers.
“Penalties exist for late payment of levies,” ASIC warned. “The late payment penalty will be calculated monthly as 20 per cent per annum of the outstanding amount and charged monthly.”
“It is a criminal offence to fail to comply with the obligation to submit your business activity metric on ASIC’s Regulatory Portal,” ASIC said.
Meanwhile, down in Melbourne, the Hayne royal commission was hearing how ASIC allowed CBA to pay a substantially reduced fine despite misleading customers in its advertising.
CommInsure made a $300,000 “voluntary community benefit payment” as part of its agreement with ASIC to resolve the issue of misleading advertising. The maximum penalty for misleading conduct is 10,000 penalty units or almost $2 million per contravention.
In this instance, given that there were four adverts found to be misleading, it could have led to a fine of $8 million. But CommInsure only had to pay $300,000 as part of its little deal with ASIC.
ASIC even asked CBA if it thought the $300,000 was appropriate. A letter from the senior executive of ASIC, Tim Mullaly, addressed to CBA, read:
"Could you please consider and let us know whether this is sufficient for CommInsure to resolve the matter, including by way of payment of the community benefit payment, in absence of infringement notices."
I'd love to receive a letter attached to my next heavily discounted parking fine asking if the amount is sufficient. Probably wishful thinking. But ASIC's letter to CBA drove commissioner Kenneth Hayne – typically silent in his high chair – to speak up.
“The regulator asking the regulated whether the proposal was sufficient in the eyes of the party alleged to have broken the law, is that right?” he asked.
Yep. That’s pretty much what happened there.
ASIC had given CommInsure notice of its findings, took no enforceable action and gave CommInsure the opportunity to make changes to an ASIC media release stating CommInsure had made a voluntary payment. Nothing about any misconduct.
What a day for ASIC. If the corporate regulator continues to go weak at the knees for big banks like CBA, what chance do the smaller players who also pay for the regulator’s service have?
It looks like ASIC needs regulation itself. Big banks need not apply.
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