ASIC asleep at the wheel – AIOFP

The Australian Securities and Investments Commission (ASIC) was ‘asleep at the wheel’ on Shield and First Guardian and needs to accept its share of blame, according to a letter from the Association of Independent Financial Professionals (AIOFP) to parliamentarians.

At virtually the same time as ASIC Commissioner, Alan Kirkland was outlining the regulator’s actions with respect to the collapse of Shield and First Guardian, AIOFP executive director, Peter Johnston sent a letter to parliamentarians stating that ASIC’s failings should not be overlooked.

The letter noted that ASIC had been warned on at least two occasions in 2023 but failed to act.

“This unfortunately allowed another $526 million of Consumer savings to be allocated

Johnston’s letter states that AIOFP cannot understand why ASIC did not take advantage of Section 920A[1][ba] of the Corporations Act which gave it power to act if they ‘believe’ or think it ‘is likely’ persons are contravening the law.

“If they had acted when alerted this matter could have been largely avoided. The perpetrators actions would have been frozen until ASIC could further investigate the circumstances. This Law gives ASIC extraordinary powers to intervene in any commercial matter,” the letter said.  “The question needs to be asked why ASIC did not implement this approach? “

“ASIC is silent on this issue but it is obvious they need to start employing ‘street smart’ lawyers instead of the inexperienced or bureaucratic Lawyers who are removed from or never been in the ‘real commercial world’.”

“The common political response is more regulatory power, but ASIC have ample already, the harsh reality is the ASIC senior management are predominately all career Bureaucrats who don’t fully understand the commercial market and behave accordingly.

“This needs to change to protect consumers and the Advice Profession going forward,” the letter said.