1.0 Introduction.
Having lost heavily in Westpoint, many people would claim I am just another disaffected investor who has lost money. I leave it to the reader to decide if my views are the irrational ravings of a sour old man, or the claims I make are valid - and have import for anyone who has money in the marketplace.
ASIC's negligence/incomptence has been a key instrument in the loss of much of the life savings of my wife and I under the full gaze of the Government's much-vaunted Australian Regulator, ASIC. However, I do not believe my loss has clouded my judgement. Strong evidence and logical deduction are the only basis of any position. I may be a rebel, but I am not by nature an advocate. However, my children, and grandchildren have money in the marketplace in the form of superannuation and direct investment. In addition, as President of the Westpoint Investors Group, I have heard at first hand the stories of Westpoint Investors (and those who invested in other companies). They have in common the theft of their monies under the watchful gaze of an uncaring, inactive, ASIC. Without a major strengthening of investor protection I also fear their children will suffer the same fate as their parents. We would not have lost our money had ASIC performed its assigned duties with diligence. Loss of lifestyle is the least of the problems. Illness brought on by stress is of more importance. Having spoken to people who contemplated/committed suicide is something I would not wish on anyone. Their convesations will haunt me for the rest of my life.
The contents of Chapter 7, 8, and 9 will be sufficient to demonstrate to the reader ASIC is as bad as I think it is - and shows no sign of improvement. However, the reader must make up their own mind if the presented evidence is sufficient.
2.0 - Background.
The 1980's and early 1990's saw many problems arising in the financial marketplace, including a number of schemes, which fleeced Australian investors.
Through prudent savings, older mum and dad investors, trusted their financial advisers and lost their life entire savings in companies such as Tri-Continental, Pyramid Building Society, and estate Mortgages. Hundreds of thousand of dollars were lost overnight. Penniless, without councillors or any form of insurance/compensation, they found themselves dependent on the Government social security system of the time.
Few of those reponsible were ever charged. Those who were received fines in the order of $50,000. A pitiful amount in terms of the money they had earned from the scams. Much of the problem could be laid directly at the feet of Banks and non Banks in a dregulated market. Those caught in these diabolicl disasters called upon the Government to tighten the regulations in respect of banks and financial advisers.
It was against this backdrop that, prior to the 1996 elections, Peter Costello was strident on the need to modernise the system - and to provide greater financial protection for investors.
So what has changed? Absolutely nothing! The behaviour of te Banks in the Storm tragedy is sufficient proof of that.
3.0 - The Wallis Inquiry and the Creation of ASIC.
On coming to power in 1996, the Howard led Government instituted the Wallis Inquiry. The opening paragraph of the report, released on 18/03/1997, under the heading of Scope reads: In accordance with its Terms of Reference, the Inquiry has confined its attention to the main fields of financial regulation, including those which aim to improve market conduct, disclosure, safety, stability, competition and competitiveness.
The Wallis Report was a fundamental document in the creation of ASIC 1998. ASIC became operational in 1999. Peter Costello appoint Joe Hockey as the newly created Minister for Fincanical Services. TheMisiter assured the public the main issue needing attentio was Consumer Protection. The commising of three reports on the need for Parliamentary Prescribed Policy in respect of insurance policies order to protect financial consumers quickly followed. Those reports also recommended the setting up of a compensation fund for investors in collapsed fund. That is yet to occur.
4.0 - ASIC’S Role.
One often hears the term regulator in reference to ASIC. The semantic meaning of “regulate” in this instance means supervises. Parliament legislates the rules of the marketplace. ASIC, an independent body reporting to The Parliament ensures all players in the marketplace obey those rules. Theoretically, ASIC does not obey any other direction external to the legislature.
The 1997 legislation criminalised many many of the activities arising out of the eighties an niteties. To the express detriment of financial consumers, Parliament decriminalised these laws within two years, once again leaving the consumers unprotected agains the ravenenous jackal of the financial industry. The Goernment's answer was for investor's, who in many cases lost everything, to redress the wrong with costly personal legal action! In effect, ASIC had become the prisoner of the financial industry and the 'big end" of town rather than an independent policeman of the marketplace. That situation remains at the time of writing.
In our society, the only redress at digressions from democracy on the Government's party is at election time. When both major parties have betrayed the financial investor, that makes life difficult. Thankfully, the rporters of the fourth estate have kept up pressure on ASIC. When one realises it is the "money end' of town that controls the media, this is remarkable.
5.0 - ASIC Financing.
ASIC and APRA are financed similarly, however I restrict my discussion to ASIC.
The Government allocates an annual budget expenditure amount to ASIC. However, the sale of information from its database results in income exceeding expenditure. ASIC is a profit centre rather than a loss centre as one would expect. Currently, ASIC receives about $560 million in direct revenue + fines. Its budget is a little over $250 million. ASIC is a 'cash cow' business for the Governmen. Wiith its annual $300 million plus profitit is a very successful 'Cash Cow'.
I don't believe ASIC should run at a loss. However , any profit it makes should go into investor protection and an investor remuneration fund,
6.0 The 2001 Financial Reform Act.
In 2001 the Parliament passed major legislative changes. The 2001 Financial Reform ACT had major later impact on not only Westpoint investors, but also for the investors of many failed companies.
The reader will recall the Liberal Governments emphasis on Investor Protection mntione in Section 3 above. The 2001 Financial Reform ACT resulted in none of hose elements being present in the legislation. The ommission of the Howard Government's promise doomed a generation of older Australians to financial hardship.
7.0 - The Law, Its interpretation and investor Protection.
One must remember a major reason ex Treasurer Peter Costello gave for the creation of ASIC was the need for investor protection.
The biggest losers in every one of the failures has been the investors – the very people ASIC has a duty to protect. It is impossible to protect investors from very bad investments. However, I can find no dictionary definition where protection takes place after an event. It is true that law may give investors protection under legislation. However, when it is possible for ASIC to determine a law is in the process of being breached and it does not take action, then the law does not protect the relevant investors from possible loss. I mention this point because of Jeff Lucy’s statements at a WIG-ASIC meeting. At the time, Jeff Lucy was the ASIC Chairman. It was his contention that the existence of the law protected the investor. That semantic meaning is correct, but only in a very restricted sense.
The Neil Burnard Trial [see Neil Burnard Trial Summary, Neil Burnard Trial Notes] demonstrates just how crazy an interpretation of a word can be. Overwhelming evidence existed Burnard had not only introduced himself to potential investors as a Director of Kebbel Investment Bank, but his business cards contained the offending words. Burnard’s defence lawyer claimed the legality of the use of Kebbel Investment Bank. The reason? Kebbel Investment Bank was a non-existent entity. To my mind, Burnard had obtained monies with a deliberate pre-conceived, lie. However, the court did not see it that way and spent almost a day of court time on the meaning of the word entity!! A need for explicit definitions exists in any vocation. However, having a reference of a legal lexicon including everyday words is a non-sense. The court eventually convicted Burnard on all eight charges. His sentence for the blatant dishonesty leading to the loss of over $100 million of investor monies? A $50,000 fine and a twelve moth suspended sentence!
8.0 - ASIC’S Sorry History.
ASIC, and APRA received much deserved criticism after the HIH collapse in 2001. It is still a current re of lgal action after all these years. However, it is only one of a legion of instances in which ASIC failed to take early interventionist action. Fincorp is another company collapse that illustrates ASIC's failure to ACT. Persusal of the ASIC website shows ASIC intitially rejecting a Fincorp Prospectus for one reason or another on a number of occasions. On occasion, a court ordered Fincorp repay investors because of a "deliberately false and misleading" prospectus. ASIC took no punitive action and investors went on to invest a further $80 million in the company. On another occsion, ASIC admits it made a 'gaffe" that cost investors $72 million.
From its earliest days ASIC has earned a reputation for tardiness and incompetence. One-time financial editor of the West Australian newspaper, Neil Prior, talks of “ASIC’s reign of error”. What sets the Westpoint tragedy apart from the other collapses in which ASIC played a roll is it is better documented. The sub-section Anomalies on the website www.WestpointInverstorsGroup.com lists a number of inexplicable ASIC behaviors in relation to Westpoint matters. It is far from an exhaustive list.
The regulator has a reputation for never answering questions that might reflect badly on ASIC. The exchanges between ASIC's Helen McNally and myself are just a continuation of this policy. My peristence in demanding an answers eventuated in ASIC refusing to correspond with me. ASIC covered itself with the statement they would any questions from me on record. ASIC, as an Australian regulator, should be setting the standards for the industry it oversees. This includes the answering of questions that might reflect badly on its past decision making.
The Fincorp failure provides an illustrative example of ASIC’s neglect of duty. On the ASIC website one finds ASIC rejected several prospectuses because they did not meet the law. On one occasion, a judge directed the repayment of monies to investors because the prospectus was “deliberately false and misleading”. ASIC took no punitive action on the matter. Another example is the large number of companies forced to take Enforceable Undertakings after they had broken the law. When a regulator fails to enforce the maximum penalty, it encourages those without conscience to test the limit of the law.
ASIC has in the past, and continues the practice, of issuing Enforceable Undertaking when market breaches of the law for instances one would not normally class as minor. While this practice continues, those so inclined will test the limits of the law. A classic example of what can go wrong is the story of Henry Kaye. ASIC made strong statements on how it would continue its fight to prosecute him, after earlier, they had only been too eager in issuing him with an EU. ASIC eventually decided the prosecution was all too hard and abandoned the chase.
Now consider Tony D'Aloisio's statement as reported in the SMH of 30/12/2009. It emerged that many small investors assumed they were far better protected than they were - that a financial services licence was some sort of guarantee of competence, and that ASIC kept a close eye on every potentially dodgy operator. Clearly, something was wrong. In August, ASIC chairman Tony D'Aloisio suggested debate was needed about the extent of investor protection. He pointed to the 1997 Wallis inquiry, which framed current financial regulations. ''If you read the Wallis inquiry, the report that underpins our whole powers, it's very clear. It says … 'we think the efficiency of the market will deliver such benefits that offsets the need for regulation'. Ten or 15 years later, when you've gone through what you've gone through, you say, 'Well, was that right?' ''
The Government and the media should remind Mr. D'Aloisio that the Wallis Inquiry took place over a decade ago, and was an inquiry. It is not, and never has been, legislation. ASIC's duty is to ensure the players in the marketplace obey the Parliament's legislated rules. There is nothing in the legislation stating ASIC obey any external rules or concepts to that legislation.
For many years the ASIC website mentioned investor protection as one of its duties. It did not define the meaning of investor protection, nor did it mention anything about the extent of investor protection. The modern version on the ASIC website, found under About Us/Our Role is much less encompassing. The simple fact is ASIC massively failed in its duty of investor protection no matter which version one chooses. One might ask if the failure to recognise a Management Investor Scheme from the outset when it issued the 2000 Freehills no-action letter is an example of investor protection. Considering the contents of the proceeding two pargraphs, what would one expect of ASIC personnel culture in relation to investor protection?
With above in mind, consider the extract from Michael Pascoe's excellent article from Crikey of 31/05/2007: Tony is rather hairy-chested about his new responsibilities. Asked why it had taken three collapses for the commission to get serious about Westpoint-style schemes, he responded: “The simple answer is that I wasn’t there.”
There is no other way to interpret Tony D’Aloisio’s comment than endemic failure existed in ASIC before his arrival. Let us now consider ASIC's record since Tony's statement.
In late 2009 ASIC lost high profile cases involving AWB, One.Tel, and Fortescue metals. It had to pay in two of those cases - one of them cost the Australian taxpayer almost $40 million. Add to the taxpayers cost the astronomical sum the Alpine Press ongoing saga, which appears to be a bottomless pit swallowing money with no end in sight. Of a more minor nature there was the Karen Carey case where ASIC prosecuted, and on the first court day, decide they were not proceeding. ASIC gave no reason for its decision.
ASIC's demonstrates its inability to find fugitives from the law when it left investors to track down both Gabriel Pennicott and Kovelan Bangaru.
Whenever the law is broken, those who broke it should receive appropriate punishment rather than the organisation itself. The issuing of an EU is not approriate, as the already mentioned instance involving Henry Kaye above proves (the reader should enter Henry Kaye in the search box in the ASIC website0. The granting of an EU only punishes investors. The Government should remove EU's from ASIC's armoury .
Further encouraging the villains of the market place is the number of instances in which ASIC received warnings about imminent failure, but failed to act. Consider the following statement from National News of 21/05/2007. Mr. Price, the Government whip, said another property investment company Westpoint collapsed in February last year owing $300 million to its 4,000 investors, while media reports said a further 10 companies were expected to go belly-up. Yet an Auditor-General's report found 99 per cent of complaints that ASIC received had been ignored and not investigated, he said. In any system, ignoring early signs of problems invariably leads to disaster.
So how many companies failed, or suffered near death experiences, in the period under consideration? In no particular order, some of the larger ones were City Pacific, Firepower, MFS, Babock & Brown, Chartwell, Storm Timbercorp, Greta Southern, Opes, ABC Learning, Allco,Momentum Mortgages, Enviroinvest, Bisconnections, Prime Life, Cyclone, and Storm. In many of these, ASIC receive warnings but took no action. Not surprising if you only investigate one percent of complaints.
A quick perusal of Apendix_1, which is a non-exhaustive selection from Events by Date, demonstrates the press has not been remiss in bringing ASIC failure to the public. The cartoon from the SMH of 08/01/2010 puts matters in true perspective.
Sorry Mr. D'Aloisio, but the evidenceindicates negiglence of duty on ASIC's part. AND YES, YOU WERE THERE!
As late as 2007 those applying online for an AFS licence were required to provide both the name of their Personal Indemnity Insurer, and their policy number, within 28 days of the granting of the licence. Further, it stated this insurance must not be less than $1 million per case. However, that it not what the law said. It was part of the original 2001 draft, but had never been legislated. A question requiring an answer is was outside pressure from the financial advisor lobby was responsible for its exclusion from the legislature? Despite the foregoing, the majority of AFSL holders did have adequate PII. However, there was one major problem. The wording of the policies was akin to Swiss cheese: it was full of holes. Without Parliament defining the wording, investors and planners alike were totally unprotected. Given one of the reasons the Howard Government gave for the creation of ASIC was investor protection, it is difficult to understand why ASIC never complained about the above matters. The fact that the screen containing details from the 2001 draft legislation remained on the application from 2001 onwards says much about ASIC’s attention to detail.
I refer the reader to The Senate Estimates Statutory Oversight Committee of 12/06/2007. It contains interesting reading pertaining to banks, FICS, investor protection, and Personal Indemnity Insurance (PII).
The discussion on FICS begins at with Senator Sherry mention of it almost at the bottom CFS 7 (page 7). Note Jeff Cooper's answer to a question from Sherry just below the top of the next page. Despite the tragic losses of many elderly people in the Westpoint tragedy, ASIC's Cooper has not kept abreast of pertinent matters/ It goes on in the same vein, and Cooper's reply that FICS processing is functioning properly. At that stage FICS had managed to process 32 of the 378 cases on hand. Further rading will the reader to all too familiar as D'Aloisio waffle,"There is a risk of that. Our approach has been to try to broaden as much as possible and in the shortest possible time the pool of funds that could be available under all the Westpoint schemes and to actively assist, where we can, with the FICS claims. We see that as just another part of the armoury of trying to maximise a return for the investors". Another ASIC example of investor protection?
After more ASIC waffle involving FICS, the discussion then moves on to PII. We are now on page 16. Despite Sherry's comments, those who held insurance were, in the main, not underinsured. The problem lay in the wording of the policies. The insurance companies laughed all the way to the bank because of the escape clauses. Only a minority of planners didn't take out PII. Tony D’Aloisio's statement, "Again, you can only go on the general approach. Certainly PI insurance as a general rule is available; there is a market for it both here and overseas. We would need to look at where this example was a decision made for commercial reasons—if indeed it was made— because they wanted to focus on other business, as distinct from it being a reaction to a concern on a number of claims that may be coming forward. I do not have information on that at the moment", may have beenpartly true. However, without ASIC prescribing policy content the purchaser and the investor were still at the mercy of the policy wording.
Mr. D'Aloisio's states on page 18. "Not that I am aware, not at this point. We will be issuing a consultation paper when the regulations are released and as part of that consultation process we will get a better feel. We have also commissioned a report which we have referred to as the Alan Mason report, which we will also be making available at the time we consult. That report takes an overview of the PI industry. As part of that process, we will get a much better feel for what is adequate and what is going to be available. Also I think we discussed at Senate estimates the issue of how we can assist with pushing some form of industry based, industry standard policies to assist. We will get a better fix on that within probably six to nine months. We probably will not have that for 1 January 2008". What does the preceding paragraph say about ASIC's committment to investor protection?
9.0 - What’s Needed.
Before offering any suggestions, one must understand why the system has failed.
Many have said ASIC is not an independent body, but does what the Government of the day demands. I have heard Tony D'Aloisio say he would do whatever the Government directed, but this could well have been a loose statement with another meaning. I have no idea if one should take Tony D'Aloisio's comment at face value, but I do know ASIC's behaviour adds to the common view of ASIC, and independent body, dancing to the incumbent Government's tune. .
Before continuing the discussion, one needs to know just a little about systems and systems design. Neither of the two concepts that follow is difficult.
At the outset of a system design, one must know its intended use in nauseating detail with the knowledge managers/users will use the processed data to make decisions. The analyst approaches the job with an attitude of "Hey, Mr. User. We both know the overall intent of the system, but I don't know what information you need to make your job easier". With this information, and knowledge of what is available as input data, one then designs the system to produce the relevant report layouts.
Another key element is the design of the monitoring system such that it allowws the earliest determination of where an internal error has occurred. Neglect of this area invariably quickly results in a massive amount of work in repairing the damage. An inordinate amount of design time, construction of suitable data, and testing goes into discovering any design errors. Ensuring the system is error free at this stage will result in a great saving of time later. Despite this, all systems contain errors. Once the system goes into production (operation), constant monitoring to determine if the system is producing the desired results is a necessity. Early found errors result in more easily managed damage control. ASIC continuously fails to recognize the importance monitoring, early detection, and immediate repair. Its appalling record of late recognition of problems, with the inevitable resulting disasters, is proof of my claims.
If one now examines what we know externally about ASIC, we find that time and time again ASIC received warnings on impending disasters, but did nothing. It indicates ASIC does not have a prioritised monitoring system alerting it to problems needing immediate action, nor does it possess a team specialised in this area. Currently, when ASIC recognises a problem it does not proceed with effective remedial action. The only possible reasons for this inaction is that is it does not possess the necessary tools, or it does not possess the will to carry out its legislated duty. The invariable result of either possibility is disaster (as has happened in all market areas). In principle, this is an easily resolved problem.
In the past, ASIC has been far too close to the market. A common story among reporters is the statement of a senior member of ASIC who left because of its regulatory approach. The statement was "ASIC's idea of regulation is sitting at the pointy end of an aeroplane, where the red wine flows freely, flying to a lunch at a distant exotic location to give a speech on regulation". Invariably the main attendees of such lunches were members of the financial planning industry. Simply put, ASIC must distance itself from the marketplace. It is a policeman of the rules, and as such, it should neither be neither a friend nor an enemy of the players in the financial marketplace.
One of the areas that demonstrate ASIC's leaning towards planners and large companies has been its eagerness to issue Enforceable Undertaking when market breaches have taken place. While this practice continues, those so inclined will test the limits of the law. Whenever the law is broken, those who broke it should receive appropriate punishment rather than the organisation itself. The granting of an EU only punishes investors. The Government should remove EU's from ASIC's armoury .
Consider the already mentioned Tony D'Aloisio statement: “The simple answer is that I wasn’t there.” Despite his continued presence from the date of the reporting of that statement (31/05/2007) as ASIC Chairman, we have seen company after company failure in which ASIC has received much warranted criticism. It has also seen questions raised in the loss of public monies lost in failed major legal actions. Add to that the money spent so far on the unresolved ongoing Alpine case. The last few weeks of 2009 shows ASIC has failed to recover under Tony D’Aloisio’s leadership [see 2009 in Events by Date]. Where were you in this period Mr. D'Aloisio?
On at least two occasions Tony D'Aloisio has called for wide ranging discussions on the role of ASIC. To my mind, the overall duties of a regulator are well understood. It also should be obvious to ASIC has abandoned its role of investor protecton. As I have said previously, ASIC is there to do its job as Parliament legislates. It is not there to satisfy what everyone wants. If ASIC cannot carry out its role as regulator under the current law, then it is in the best position to go back to Parliament with what it requires. Parliament can then legislate the necessary laws after due consideration.
It emerged that many small investors assumed they were far better protected than they were - that a financialservices licence was some sort of guarantee of competence, and that ASIC kept a close eye on every potentially dodgy operator. Clearly, something was wrong. In August, ASIC chairman Tony D'Aloisio suggested debate was needed about the extent of investor protection. He pointed to the 1997 Wallis inquiry,which framed current financial regulations. ''If you read the Wallis inquiry, the report that underpins our whole powers, it's very clear. It says … 'we think the efficiency of the market will deliver such benefits thatoffsets the need for regulation'. Ten or 15 years later, when you've gone through what you've gone through,you say, 'Well, was that right?' [SMH article of 30/12/2009'].
Where in the legislation indicating ASIC make any reference to the Wallis Report for direction?
Isn't it ASIC's legislated role to protect investors? Tony D'Aloisio statement loses any possible credence in light of the following : "Mr. Price, the Government whip, said another property investment company Westpoint collapsed in February last year owing $300 million to its 4,000 investors, while media reports said a further 10 companies were expected to go belly-up. Yet an Auditor-General's report found 99 per cent of complaints that ASIC received had been ignored and not investigated, he said [9_National News_21_05_2007].
The number of legal defeats, with huge losses of public monies, inflicted on ASIC over the years (particularly in 2009) reflect badly on ASIC management. Because someone is a brilliant lawyer does not necessarily make them a good manager. Good managers are a rare breed, possessing the necessary education, training, and an innate ability. Perhaps ASIC needs a hardheaded manager of proven ability.
In addition to a change in legislation because of flaws in the original law, there will always be a need to change laws as the environment changes. That is the universal rule for all systems. What ASIC needs more than changes to the law, is a dedicated approach to its tasks. As a believer in evolution rather than revolution, it gives me no joy to say the current management has proved it is incapable of implementing what is required.
The vast amount of evidence indicates ASIC suffers from internal disorganisation. Perhaps it is the consequence of lawyers running an organisation. The legal profession is the only discipline of which I know where a practitioner receives remuneration for failure. That may sound harsh, but I have in mind something other than an attack on the legal fraternity. One can regard Legal cases as comparatively short term one off projects. The degree of logical difficulty is not great in most cases, and the case will hinge on a few important items. Lawyers do not involve themselves in complex interacting systems where the effect of one module may have its effects on many others. The system designer creates each of these modules with a pre-specified output in mind. Spurious results from a module that appears to be operating correctly may have damaging effects in one, or mor, modules further down the flow of data. A systems designer, in addition to creating the overall project delivering results must guard against odd data combinations causing obscure problems. He must also design a monitoring system to ensure the results are not in error when the system is unleashed on the users. In spite of the planning and testing, the system is of such complexity it will always contain errors. We are now a long way from the world of the legal practitioner. ASIC is a business system complete with defined objectives, a budget, and an income stream. A capable manager best oversees it rather than a star lawyer. Add to that a systems approach and ASIC performance would rapidly improve.
A competent manager would ensure the day to day operations run smoothly as in any successful business, leaving highly qualified legal personnel to attend to legal matters. In such a circumstance, the manager would ensure that the legal team had thoroughly tested a high-profile, costly, case before prosecution. The standard tools, as used by systems analysts, would prove invaluable in such cases. The current public monies lost by ASIC impact on budget - and degrade ASIC's image to all.
Many ASIC operations do not need highly qualified legal personnel. In many instances, less qualified personnel with a modicum of training can carry out mundane tasks. Monitoring of the marketplace springs to mind as an example
PII is still a running sore that is only partlially fixed. At the ASIC-WIG meeting of 05/07/2007 I outlined a scheme in which all investors would receive PII protection under a "user pays" scheme. It should be a Government controlled scheme in which the user pays. It is not envisaged as another profit centre for the Government. The profit should be minimal, and invested in investor protection. Its greatest drawbacks were it would be Government administrated, and the big-end of town would lose easy profit. Whatever Scheme finally emerges (yes, I know there is one currently), it will not work until the Government prescribes the policy content.
None of the above is rocket science. It is just practical commonsense to use the correct tool for the job at hand.
Every Westpoint Mezzanine investor put their money in an illegal investment scheme (the fact it was never deemed an illegal MIS is a technicality). If a planner misleads an investor for any reason then they are responsible for the financial loss of the investor. However, the law protects ASIC from investor litigation. One cannot sue ASIC for negligence. The only real cause for action involves malesfeasance on ASIC’s part – an all but impossible task. Such a law may have a place in Orwell’s Animal Farm, but it has no place in a democracy where all entities are considered equal. This law provides ASIC with an escape from its responsibilities, and weakens ASIC responsibility to ensure it performs its duties. The Government should change this law immediately.
In addition to a competent body replacing ASIC, the Government should institute two other changes..
The first is a law ensuring every Financial Planner is licenced. Nothing outrageous about this. From plumbers to doctors the law demands a licence. Why are financial planners, who manage their clients' life savings any different?
It should be obvious to all we need and independent Federal Funded Consumer Protection. The word independent is a key word. It must be free of the political pressure and pressures endure by ASIC. It must be more active and robust than either FOS, or the Ombudsman schemes, which have, at best, existed very medicore performances.
10.0 Decision Time.
As I write, we have as politial leaders a Prime Minister who art in the '747, ego be his name,:a mad monk opposition leader who screams the proposed cost to combat global warning is an excuse for a new tax, but says he he will combat global warming - apparently at no cost; a Green's leader who doesn't seem to have a positive policy - other than to get re-elected; the antics of the the NSW Government (I can't comment on what happens the other states); people up trees because of unfair laws. Democracy in Australia is all but dead but for the facade of pretence from the spin masters. Democracy is an empheral beast needing constant protection.
The inaction of successive Government to repair ASIC has negatively affected hundreds of thousands of Australian lives. We are still waiting for the open inquiry Senator Sherry promised on behalf of the Labor Government. Without exerted pressure on our politicians, I do not expect either a Royal Commission, or the keeping of the Sherry promise.
Is it any wonder depression in the community is so rife?
Please put all that aside, and decide if my criticism of ASIC is valid. If it is, then actively join the chorus of voices demanding a Royal Commission into the financial industry, and ASIC. Poor financial regulation affects every Australian in some way.
If you disagree with my claims, then please email me with proof backing your position.
Grahm MacAulay
gmac@ihug.com.au