Sequoia announcement unlikely to sway ASIC Shield investigation
ANALYSIS
The move by Sequoia Financial Group, to appoint former Australian Securities and Investments Commission (ASIC) commissioner, Danielle Press, as independent chair of an AFSL Governance Committee will have little influence on the regulator’s inquiries relating to the Shield and First Guardian funds.
Apart from the usual ethical conventions which must be followed by ASIC as a Commonwealth Government agency and regulator, the ASIC hierarchy will be conscious of recent parliamentary questioning around the roles adopted by former senior leaders of its sister regulator, the Australian Prudential Regulation Authority (APRA).
APRA as recently as November last year found itself defending its governance arrangements around members of its executive who left the regulator and ultimately took up roles within regulated entities.
That defence came amid questioning from NSW Labor Senator, Tony Sheldon, relating to former APRA chair, Wayne Byers, taking up a non-executive director role at Macquarie Bank while former APRA deputy chair, Helen Rowell, had taken up a non-executive director role with Australian Retirement Trust (ART) less than a year after leaving APRA.
Answering Sheldon’s questions, APRA chair, John Lonsdale, said the regulator looked very carefully at conflicts and if it saw a conflict after a member had left or joined a regulated entity, then it would act.
In the case of Press, she has not been an ASIC commissioner since August 2023 and has subsequently been appointed as chair of Insignia Financial Limited Trustees Board, and the Customer Owned Banking Code Compliance Committee as well as taking up non-executive director position at Infrastructure Specialist Asset Management and Income Asset Management.
Her familiarity with governance and regulatory issues is unquestioned.
Announcing the appointment of Press to the Australian Securities Exchange last Friday, Sequoia said the AFSL Governance Committee would “provide premium oversight, enhanced coordination, and reinforce governance excellence across the Group’s three AFSLs including Interprac.
The announcement by Sequoia comes amid continuing ASIC scrutiny of Sequoia with the company confirming a day earlier confirming to the ASX that it is “cooperating with ASIC which is investigating the failure of the Shield Master Fund and First Guardian Master Fund and their responsible entities”.
An interesting strategy by Sequoia to paint themselves as a highly compliant and leading edge business. However, in the context of a significant number of complaints from the clients of the Interprac practices that recommended or simply put them into Shield and First Guardian, the scale of this mess will soon become apparent. Firstly, they will need to make some disclosure in their 2024/25 financial results about ASIC’s investigation and the extent of complaints that they have received (due by the end of August). Secondly, with the new IDR reporting regime in place, they will need to notify ASIC of how many complaints that they have received by 31 August (this is not yet publicly released data, however will be soon). Finally, a bit later on, AFCA will issue their datacube for EDR complaints received during the 2024/25 year. Whilst many more complaints will be received in the 2025/26 year, there is every indication that they have already started to flow in before the end of 2024/25. It is very difficult to hide problems these days and window dressing with new committees and former ASIC Commissioners will not hide the problem for ever.