ASIC canvasses looping all culprits into Shield/First Guardian compensation
The Australian Securities and Investments Commission (ASIC) has signalled its view that all participants in the investment eco-system which gave rise to the Shield and First Guardian collapses should financially contribute to remediating affected investors.
Giving evidence before Senate Estimates, ASIC deputy chair, Sarah Court reinforced the manner in which those involved in the eco-system including lead generators, financial advisers, ratings houses, auditors and super fund trustees had been doing a lot of finger-pointing with respect to blame.
Court referenced a “chain of different parties and the existence of “a complex chain of culpability”.
And in terms of making good the damage, the ASIC deputy chair said, “all players might have a role to play in our view”.
“There are a chain of different parties and individuals who have contributed to these collapses and they range from lead generators, financial advice firms, the people behind the funds that have failed, the superannuation trustees, the ratings agencies and, indeed the auditors,” Court said.
“There is a complex web of culpability in our view and it won’t surprise you that many of the players in the chain are pointing fingers at each other.
“There is the potential there that all of those players may have some financial role to play in compensating people,” the ASIC deputy chair said.
Both Court and ASIC chair, Joe Longo made clear to the Senate Economics Committee hearings that a significant element giving rise to the collapse of the two managed investment schemes (MISs) was the current “very permissive” regulatory structure.
As well, Longo lamented the fact that ASIC, as the regulator, had been “cast in the role of picking up the pieces” rather than preventing the harm.
Senators on the Economics Committee referenced the fact that the Government had relatively recently initiated a Treasury review of managed investment schemes and the recommendations ASIC had made to that review.
“Had those elements been put in place, could the Shield and First Guardian collapses have been avoided?” Tasmanian Green Senator, Nick McKim asked.
Longo agreed that the anti-hawking provisions may have been better applied with respect to lead generation activity.
There are two other key participants that contributed to this situation who should also be held accountable:
“We confirm that ASIC is still looking at the matter regarding Lion Property Group Pty Ltd and anticipate to revert back to you with a further update in a few months.” 22-1-21.
Asic appear to act too slowly. How many ppl lost money since I reported them? They need to be held accountable for moving at a snail’s pace.
We should collate and publish how many reports have been submitted.
ASIC & APRA pointing fingers at everyone but themselves.
Hot Mess Jones, Jimmy Chalmers & rest of the ALP who buried the MIS review for last 2 years certainly ain’t pointing fingers at themselves.
Pay up Canberra Pollies & Bureaucrats your share of Compo for your share of these Failures.
Pollies & Bureaucrats Compo Scheme.
PBCS
Time they contribute from their own pockets $$$ to help compensate.
I wasn’t a player in the Shield fiasco. But I bet they will make me pay for the idiotic planners that were
That’s exactly what should be done rather than making innocent advisers foot the bill via CSLR(I.e. hence its name “of LAST resort’ not ‘scheme of First Choice’). The CSLR is not a convenient piggy bank to raid every time a criminal rips off their client.
Because you allowed these criminals to continue their cold calling after you were warned of their practices several times. Other advisers who were doing the right thing are not responsible for their misconduct, you are ASIC because you failed to act on the warnings which were openly given to you many many times.
By the way what are you doing about certain Industry Finds that are advertising CASH INCENTIVES (ie.Bonuses) to stay in their particular product rather than give the client an ethical choice of product????
Here’s your warning about this practice ASIC because this as you should be aware is an entirely unethical approach. CASH incentives to retain funds is clearly unethical as it entices clients to not look outside the product and stops them receiving full unbiased Financial Advice which is required when making such an important choice for their retirement future. Consider this a warning because this crosses your own ethical guidelines, and if you don’t shut down this practice then you are not doing your job and their will be consequences for these retirees.
CSLR should not exist. It is not ethical to make other businesses pay for businesses who are robbing people full stop. ASIC are doing a sales approach here – quote huge figures so we will accept small amounts. I say: NO to the lot. Not even $1 should go out of ethical business operators to pay for crooks.
100% agree – what is happening in this space is absolutely rubbish with regard to member equity. Nonetheless, some species continue to be protected.
Can we get over this whole “cold calling” thing? Cold calling was not the cause of this problem. Conflicted arrangements between the fund managers and the advice practice owners were the primary cause.
Cold calling is just a marketing technique. There is nothing magical or sinister about cold calling that makes it worse than other marketing techniques. If the cold call recipients in this situation were given good quality best interest advice instead of conflicted advice, they would have benefited from cold calling. They would have been much better off than the millions of consumers duped by the misleading and deceptive advertising of union super funds, or seduced by union super sponsorship of their favourite football team. If the cold calling recipients chose to ignore the calls, just as many people ignore pervasive ads and sponsorships, they never would have been impacted.
Community negativity towards cold calling, and attempts to restrict it, stem from the fact it is disruptive and annoying. But it is not inherently dodgy or deceptive. Like all types of marketing, dodginess is a factor of content not form.
ASIC should add themselves to the list of culpable parties.
The most important culprit is conveniently ignored. ASIC is paid to regulate and protect consumers from this exact type of activity. It completely failed despite being given multiple warnings about what was happening. Many people need to be investigated and charged, and as part of this ASIC too needs to be held accountable for their significant part in this whole mess.
Probably the biggest failure was ASIC. This is why the Dixons Advisory inquiry should have gone ahead because like Frist Guardian, ASIC failed when warned about Dixons early on. How many times has this happened, yet ASIC have zero reflection about their performance and zero accountability. An enquiry into these sagas and ASICs performance should be a priority. We learn from our mistakes but not ASIC, they just deny them.
Whilst I don’t envy ASIC’s role in having to clean up this mess, the dodgy/criminal operators are an open secret in the industry – Shield/FirstGuardian are just the worst that we’ve seen, and (hopefully) will see for a while. Most, if not all, financial advisers have come across someone else’s misconduct from time to time. There are definitely others.
Many of the advisers I work with are absolutely terrified of ASIC – they’re the financial services boogeyman. These advisers are honest, hard working, and genuinely try to help their clients – rather than just ripping them off to make a quick buck. There’s a pervasive attitude that “ASIC will find something if they really want to”, and a genuine fear by the advisers that they could lose their business/career/livelihood over small (non-criminal) errors.
In my humble opinion, ASIC’s approach needs to change. The Hayne Royal Commission rightfully tidied up a lot of the sector that needed fixing (even if its still not perfect). However, the regulator’s approach encourages people to avoid ASIC and “stay off the radar” – rather than engaging meaningfully with them. This is a missed opportunity for the regulator to more deeply understand how the sector operates at a granular level, and for its participants to proactively seek out the regulator where any misconduct is spotted.
For a truly healthy financial services industry, ASIC and the people it regulates should be able interact collegiately and work together for the benefit of Australian consumers.