Tuesday, 25 June 2013
Australian Securities and Investments Commission
and the Christian Brothers, Senator Back. I see you leaving the chamber.
Last Thursday in this chamber a motion was passed which referred an inquiry into the operations of ASIC to the Senate Economics References Committee. I proposed that inquiry, which was supported by all sides, because of my disenchantment with ASIC over a number of years.
The Parliamentary Joint Committee on Corporations and Financial Services has tabled its second oversight of ASIC. It was released in May. I have the document here. In that report, Mr Alex Malley, Chief Executive of CPA Australia, referring to ASIC's audit procedures, says:
ASIC has persistently demonstrated a propensity to make statements in a range of public forums that are sensationalised and driven by a media grab mentality rather than seeking constructive outcomes and working collaboratively with the profession.
I could not agree more.
Let us go to point 5.6 on page 46. The committee asked ASIC to provide, on notice, a breakdown of the 11 persons who were jailed, banned, or disqualified or who had removed themselves from the financial industry. As of 16 May, two months after the hearing in Sydney, ASIC has not responded. That does not surprise me.
Let us go to point 5.10 on page 47. The committee reiterated its view that there needs to be greater cooperation between the corporate regulators, ASIC and APRA, and between the corporate regulators and the law enforcement agencies. I have been calling for this for years. I remember asking ASIC when it was going to act on the infamous liquidator Stuart Ariff. I actually phoned a DPP and asked whether they would be charging Mr Ariff. They said, 'No, we haven't had a brief from ASIC.' I asked ASIC, 'When are you going to provide a brief?' They said, really, that was none of my business, but they did provide the brief and now Mr Ariff has been jailed for six years.
At Senate estimates I recently asked Commissioner Kell why it took 16 months to act on whistle-blowers' information on wrong-doings in the financial planning sector of the Commonwealth Bank. In that 16 months, how many other wrongdoings were carried out?
On page 54 of this report the PJC says:
The committee is satisfied with ASIC's focus on the surveillance of financial advisers and its risk based approach to this monitoring. The regulator's attention must continue to be on those outliers that exhibit key risk factors.
The PJC might be satisfied, but I am not—nor are many others in Australia.
We have seen the case of one Ricky Gillespie. It took until November 2012 before action was taken. I wonder what happened in the following 3½ years.
In closing, I want to congratulate Fairfax journalist Adele Ferguson for her rugged determination in getting to the truth. Adele is not frightened to take on the financial institutions and the regulators and is proving to be a real voice for those who have been wronged. For the listening public, submissions to the Senate inquiry close on 21 October. I look forward the Senate inquiry into ASIC. They are paid good money and their job is to be the corporate watchdog, to see that people in the corporate world—whether it be liquidators, insolvency practitioners, financial planners, companies or people selling investments—are sound and everyone does the right thing.
Far too often in this nation, we see people—many of them elderly—who have worked hard and saved their money get some financial advice, invest their money and then lose it. It is simply frightening to read many of the stories coming out in the media of those who have been, in my words, dudded by financial planners who are more concerned about earning commissions, returns and fees and who show little concern about the people they are supposed to be advising.
Hopefully, on 1 July, when the FoFA regulations start, we will see an improvement. But there are still problems with vertical integration, where financial institutions have their own products and financial planners and their financial planners tell the public to buy the products of the company they work for. Is that the best advice? I say: not always. So we look forward to the Senate inquiry. Hopefully, the committee will come up with recommendations that are for the good of the people of Australia and that will mean that we will have a better corporate watchdog, with more honest and sensible advice, so that people who work hard are rewarded in their retirement and so that, when they invest their money, they get a return on that money and do not simply lose it.