Speaking at the Institute of Managed Accounts Professionals (IMAP) Independent Thought Conference on Thursday, ASIC commissioner Alan Kirkland said the responsibility for good consumer outcomes falls on everyone within the financial system, not just the corporate regulator.
“For licensees generally, that means ensuring that you continue to fulfil your obligation to provide efficient, honest and fair financial services. For advisers, it means acting in the best interests of your clients, providing appropriate advice and prioritising their interests over yours,” Kirkland said.
“For fund operators, it means fulfilling your obligations as a responsible entity and licensee, including acting in the best interests of scheme members and providing efficient, honest and fair financial services for platform operators. That means continuing to perform your obligations honestly and with reasonable care and diligence.
“And for ASIC, it means ensuring compliance through our supervisory and surveillance work and addressing misconduct where we see it.”
Similarly, the commissioner pushed for industry members to hold others to account, pointing to the “devastating fallout” coming from the Shield and First Guardian failures.
“We recognise that the overall majority of financial services are doing the right things by their clients, but we also recognise, like you, that the behaviour of a small number of bad actors can cause significant harm to consumers and threaten the reputation of an entire industry,” Kirkland said.
“While we can never eliminate all bad actors, we need to work together to minimise the impact of misconduct. We all have a role to play in that. Licensees, it’s your responsibility to ensure that advisers are acting in the best interests of clients, and that you have adequate monitoring and supervision arrangements to detect concerning conduct.
“Advisers, you’re in a position, a unique position, to recognise where somebody has been the victim of poor advice from somebody else, individually and in co-operation with your peers, you must uphold and promote the ethical standards of the profession and hold each other accountable for the protection of the public interest. Where you detect concerning conduct, we encourage you to report it to ASIC.”
Notably, advisers had raised concerns over the Shield and First Guardian funds well ahead of the regulator taking action.
The Financial Advice Association Australia had “facilitated reports” to ASIC as early as 2023, according to CEO Sarah Abood, after its members had seen some of the advice being provided.
Appearing on Spotlight last month, Liberal senator Andrew Bragg railed against the seeming lack of urgency from the regulator.
“They were warned back in October 2023 from a very reputable financial services company that there was massive malfeasance here,” Senator Bragg said.
“They took almost a year to announce a proper full investigation. There are large businesses that have made complaints and warnings about First Guardian and ASIC ignored them.”
However, Kirkland insisted ASIC continues to “cut down on this conduct”, adding that its investigations go beyond the two highly publicised scandals.
“While they’ve dominated the headlines, they’re not the only instances where industry professionals appear to be playing fast and loose with people’s life savings,” he said.
“We’ve currently got active investigations into multiple high risk super switching matters, each involving multiple third parties and associates. In the case of Shield and First Guardian alone, we’ve got more than 40 staff involved in those matters, making it one of our largest enforcement projects in many years. We’re scrutinising as part of that every part of the value chain.
“That includes the lead generators, the financial advisers, the advice licensees, the superannuation trustees that hosted the funds on their platforms, those involved in rating the funds, and the auditors and operators of the managed investment schemes themselves.”
At a parliamentary joint committee hearing into ASIC oversight in September, ASIC chair Joe Longo revealed that while Shield and First Guardian impacted around 11,000 consumers with approximately $1.1 billion of funds invested, the other funds it is investigating could see that number soar.
“I regret to inform the committee that it’s even more than that, because there’s a range of funds that we’re looking at, a range of investigations we’re looking at, and the number of investors that have been affected by this conduct, I would have thought, is closer to 25 or 30 thousand,” Longo said last month.
It’s not good enough, known (reported) misconduct has been reported on a sole licensee/adviser, where no client received disclosure documents (systemic issue) the licensee/adviser retires with a sale cheque. Yet they’ll issue skye wealth a fine for missing a check box. Really makes you wonder what the point of compliance really is hey!
These comments include some really good points but are still all uniformly negative. Another way to look at this is that it is an opportunity to start anew as an industry, including ASIC. Kirkland does make the point that the overall majority of financial services are doing the right thing by their clients. He has changed his tune since being at Choice. Isn’t this a step in the right direction.
Maybe I’m naive but I think if we have the right attitude, some longer term good might just come out of this disaster.
The damage, persecution & vitriol displayed by ASIC toward Financial Advisers as a whole over the last 15 years is inexcusable.
Lets start by having ASIC apologise for their discriminatory behaviour and poor attitude and then there may be a glimmer of hope looking forward.
Of course, this isn’t going to happen and so here we are.
You cant keep bashing people with a baseball bat for years and then shake hands and make up.
The use of ‘financial serivces’ as opposed to financial advisers say it all for me!
How about ASIC actually do their job. Everyone knows ASIC was warned many times around Storm, Dixons, First Guardian, Shield etc. Each time ASIC did nothing resulting in significant losses for investors and to top it off they let all the criminals walk away scott free.
We all have a role to play, so why is it a regular occurance that ASIC do not act on reports of misconduct and wait for everything to blow-up years later? See – Dixons, Shield, Trio, etc etc. There should be an enquiry into their conduct and to determine whether there can be improvements made.
Perhaps if ASIC was fair in the way they deal with advisers rather than chasing headlines people would be more open to dealing with them. Just look at their own whistleblower policy. They are a disgrace to our industry and have caused more harm than anyone.
I’m all for getting rid of dodgy operators, but when ASIC then allow providers to walk away and encourage complaints that add to CSLR why would anyone be willing to help them out.
Clean out that swamp first.
Spot on.
This bloke should be back reviewing vacuum cleaners.
What a wonderful idea, ASIC. So why don’t you get the whole industry to pay for it, instead of asking advisers to foot pretty much the entire bill?
Of the 40 staff ASIC have working on this, how many actually know and understand how the financial planning and funds management industry actually works? Having government bureaucrats and lawyers who did not get picked for the limited opportunities in the big end of town using ASIC as a career steppingstone on this task will not get any meaningful outcomes. We have lots of knowledge of advisers who took this to ASIC over 5 years ago who never got a call back. We have knowledge of former Interprac staff taking this to their management and being ignored and or paid out with Non-Disclosure Agreements attached. And when Danielle Press took a paid position with Sequioa a few weeks ago, the message from them, her and ASIC was clear. Greed, corruption and laziness are not unique to our industry but the outcomes can be devastating.
totally AGREE
iF ASIC had any sense they would investigate the largest 10 of interpracs practices instead of being frightended by Danielle Press who talks a good story however hasnt a clue on governance oversight and then look at theri governance processes and capability of their senior team or should we say Mr sleepy
Alan Kirkland’s comments are laughable.
In his past with CHOICE he did nothing but ruthlessly attack Advisers on a regular basis.
Back then he would have been happy if all Advisers had been wiped out completely.