Stronger punishments may be more effective deterrents than the current “toothless” enforceable undertakings (EUs) handed to the corporate regulator, according a superannuation industry association.
In its submission to the Senate Economics References Committee inquiry into the performance of the Australian Securities and Investments Commission (ASIC), the Australian Institute of Superannuation Trustees (AIST) recounted the experiences of one member who raised concerns over an adviser lying to 200 clients in order to roll them out of an industry fund.
After eventually convincing one of the affected clients to file a formal complaint, the end result was an enforceable undertaking that the planner “had to write to ex-members and tell them (basically) that he had lied to them. Ex-members chose not to leave the planner,” according to the AIST member feedback.
“This led me to agree with other comments about how enforceable undertakings are toothless … a clear message needs to be sent so reality hits home,” the AIST member reported.
AIST said it echoed those concerns and suggested stronger punishments may be more effective deterrents.
The submission added its members are more concerned in the work that ASIC undertakes to ensure cases do not end up in court, rather than its investigation and enforcement work.
On this front, AIST said it applauded the consultative approach taken by ASIC through its series of regulatory guides.
AIST said it supported the “twin peaks” regulatory approach with the combination of the Australian Prudential Regulation Authority (APRA) as the prudential regulator and ASIC as the corporate regulator. The body also supported a fresh financial system inquiry that should look at how effective the original Wallis Report recommendations had been.
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