During a Senate inquiry on Tuesday (16 November), 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.
“The real question for me… is what action should’ve ASIC taken when it received the information from the Western Australian regulator?” Mr Coburn said.
“The facts in this case indicate to me that ASIC failed to act decisively when it received very serious information and complaints from the regulator on the 17th March 2017 and failed to take appropriate action within its powers to stop this scheme.”
Mr Longo said earlier in the day that 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 Coburn argued that ASIC should have commenced investigations immediately and interviewed relevant parties, saying there were “serious, serious material non-disclosures of risks to investors that would have been known had ASIC interviewed people shortly after the 17th of March, 2017”.
“Why did it take you six months – 17 March 2017 to the 29th August 2017 – to put a stop order on?” he said.
“What was happening within ASIC? Which team did it go to? Who was dealing with it?”
Mr Coburn added that the government must look at implementing “proper insurance” of management investment schemes and that it should adopt a similar model to the UK in that all investors receive financial advice.
The Sterling Income Trust inquiry will continue on Thursday (18 November).
Too busy saying Fee Disclosure Statements don’t comply with the law because of a spelling mistake. I’d say given I got an audit report that stated my Advice didn’t meet best interest obligations because I left off the clients Motor Car from an SoA, I’d say ASIC were too busy designing and enforcing bad regulation.
Good on you Niall sad that ASIC has just became a shadow of itself after the early 1990’s. Now more interested in KPI’s instead of proactive investigations. Uses a broad definition of public interest as it basis for most things – leave something to fester for long enough and it become public interest when by then to many investors have suffered.
ASIC were too busy pursuing Accord Partners Ezzat-Daniel Nesseim for backdating documents and working out how they could let the banks get away with money laundering to actually help the people we pay them to protect.
ASIC were too busy trying to bury licensed financial advisers. They need to their priorities changed.