22 January 2016
by Gabriela Motroc

Consumer advocate: ASIC should be stripped of its consumer protection role

Consumer advocate Denise Brailey told the ABC in an interview in September 2014 that the Australian Securities & Investments Commission “has done such an abysmal job that a royal commission into the whole sector is definitely, urgently required.” Brailey recommended that all consumer protection be “taken out of the hands of ASIC.”

Although ASIC chairman Greg Medcraft said in early 2015 that his organisation is under-funded and claimed that penalties for corporate crime are light as a feather, some people perceive this situation as a natural reaction to the watchdog’s incompetency throughout the years. Mr Medcraft concluded that the silver lining of the financial system inquiry was that Australians want ASIC to be more proactive and to intervene more.

In 2014, the chairman had to defend his organisation against claims that it failed to monitor the Commonwealth Bank financial planner scandal and blamed the bank for breaching an enforceable undertaking agreement with the regulator, which eventually led to a Senate inquiry being given false information. Former financial planner and whistleblower Jeff Morris opined that “ASIC’s soft approach with major players is largely to blame for the state of the financial advice industry” and insisted that the watchdog “did virtually no investigative work of their own.”

Honorary associate at University of Sydney’s Department of Political Economy and retired political economist Dr Evan Jones wrote in a piece for Independent Australia that ASIC “has intruded gingerly and inadequately into the [Commonwealth Bank] scandal,” but this was not the watchdog’s first clash with an angry and dissatisfied population.

According to Catallaxy Files’ Sinclair Davidson, the problem with ASIC, the ACCC, ATO and “most government agencies whose name begins with ‘A’ is a lack of good governance.” Davidson cited Matthew Stevens, former senior business columnist for The Australian saying that “either the Corporations Law is far too complicated to effectively enforce, or […] ASIC is simply not up to the job.”

Davidson argued that, in ASIC’s case, there is little difference between decision management and decision control and added that “there is no explicit mechanism to ensure that effective control is exercised over management decisions.” Former ASIC chairman Tony D’Aloisio appeared before a Senate estimates committee hearing in 2010 and had to defend the spate of court cases the government body had lost. Mr D’Aloisio assured that the corporate watchdog “has acted, and continues to act, responsibly in the way that it selects and runs litigation and that it approaches those cases in a focused way, with considerable due diligence.”

A few months ago, Federal Resources Minister Josh Frydenberg commissioned a full-scale audit of the Australian Securities and Investments Commission, outlining his ambition to store integrity to the financial sector. ASIC has been subject to a number of parliamentary inquiries due to its failure to prevent widespread misconduct in the financial planning industry.

One of ASIC’s biggest critic for the last 15 years is an educator turned political party founder Jamie McIntyre.

He said, ASIC is not only grossly incompetent at stopping the financial planning industry, which is 90% owned by big banks ripping off the average Australian, they are effectively a mouth piece of the financial services industry going soft on the big banks.

“However, ASIC goes hard on small companies that are often innocent, just in order to create a perception they are doing something useful.

“ASIC have an effective corrupt internal culture where many ASIC officers lose their moral compass once they work there because the culture within the organisation lack ethics.

“ASIC game the court system, lie to politicians and abuse the law to target their critics and companies that create competition for the big bank controlled managed fund financial services industry gravy train.

“ASIC are meant to protect investors, but the truth is they don’t care about investors at all. They will happily destroy investments over a technicality and destroy mum and dad investors’ life savings to serve spiteful vendettas and create press releases to mislead the public.

“The entire work force in ASIC should be sacked starting with ex banker Greg Medcraft. Why have a banker as the head of a watchdog that’s meant to be doing something to stop the bank owned financial services industry from ripping off mum and dad investors?

“ASIC try to stop investors investing into property from bank lobbyists who push them to target property spruikers, as they encourage Australians to invest into a safer investment and away from risk managed funds in the stock market where financial planers make their large commissions for life.

“We need an honest, transparent regulator, and not an unethical dishonest abusive one we currently have. ASIC need to be exposed and put in their place, otherwise it suggests that inept government departments are accepted in Australia. That’s not an Australia I agree with”, said McIntyre.