ASIC inquiry is long overdue
For the past 13 years covering personal finance for The Sydney Morning Herald and The Age I have interviewed or received emails from dozens of victims of shockingly bad financial advice and of investments that failed. Billions of dollars have been lost, often the entire life savings of retirees.
There was the 61-year-old cancer patient who had inherited her parents' house. Although she was assessed as a "defensive investor" by the financial adviser she was given a "diversified portfolio", which consisted mostly of Westpoint's York Street Mezzanine investment in Sydney (which failed in 2005) and debenture issuer Bridgecorp (which loaned money to property developers, including Westpoint, and failed in 2007).
There was the age pensioner who put almost all of her life savings of $50,000 into an investment run by Australian Capital Reserve. She first heard of the investment through its advertising on TV.
She emailed me after ACR collapsed: "My husband died last year and I will probably end up having to sell my home and try to get into a retirement village."
Then there was the 74-year-old widowed mother who has lost $23,000. "She was attracted to the TV and newspaper ads and started out investing $8000 [without telling us or asking our advice]," wrote a relative of the woman.
"She went on to add her matured fixed deposits from her bank over the past two years and built up her investment in Australian Capital Reserve to $23,000. Each time her notes were about to mature, she would receive a phone call from Australian Capital Reserve persuading her to add more to her investment."
Another wrote of her "sadness and frustration" at her mother's misfortune. "I spent the whole day with her at Perth Royal Hospital Breast Clinic, where she is undergoing further testing for breast cancer and then came the ACR collapse. She lost $250,000. It was everything she had. She lives off a pension and used the interest to get herself something from time to time or to spend on the grandchildren.
"She worked like a Trojan, as most in that generation did, and earned every cent herself, as a single mum. We could never get her to spend her money because something had to be left for her kids. She is totally spent, the life sucked from her. Her devastation is frightening."
One woman wrote to me about her sister who, at the age of 21, had had a horrific work accident. After several years, she won compensation. "[She] is now 36, with three kids under the age of eight. In 1998, she was advised to invest all the money she had left - $180,000 - with ACR.
"You cannot even imagine how hard it was for me to be the one who informed her of her loss. Who will help my sister? Who will look after those three little kids?"
And then there are those who must try to find work when they were planning to put their feet up.
"My husband and I have just lost $250,000 due to the collapse of ACR. This was my husband's retirement fund and, as he is 62, his chances of now getting a job are slim to none," says another.
These are just some of the stories; there are many, many more over the years. These disasters were not self-inflicted. They did not not come about because investors were greedy. They were told to go and see a properly qualified financial adviser or they invested in a seemingly low-risk investment "just like a bank account".
Investors cannot be totally protected. But these people should have expected a better level of protection. Sometimes the victims are partially compensated, sometimes planners are banned and sometimes the perpetrators of dodgy investments are brought to justice.
But it has been too little, too late. Usually, after the the money is lost.
The Senate inquiry into ASIC follows an investigation by Fairfax Media showing the regulator took 16 months to act on information from whistleblowers about misconduct inside the Commonwealth Bank's financial planning unit.
Hopefully, the inquiry will be wide-ranging and if lessons can be learnt and acted upon, future generations of investors will be better protected.
Frequently Asked Questions about this Article…
The Senate inquiry is a long‑overdue review of the Australian Securities and Investments Commission (ASIC). The article says it follows reporting that ASIC took 16 months to act on whistleblower information about misconduct in the Commonwealth Bank’s financial planning unit. A wide‑ranging inquiry could identify lessons and changes to better protect everyday investors from bad advice and failed investments.
The article shares many real stories over 13 years of people who lost life savings, pensions or compensation because of shockingly bad advice or apparently low‑risk investments. Examples include retirees who lost everything and younger parents left without support — showing the severe personal impact of poor advice and failed investments.
The article specifically mentions Westpoint (the York Street Mezzanine investment that failed in 2005), debenture issuer Bridgecorp (which failed in 2007), and Australian Capital Reserve (ACR), which collapsed and left many investors out of pocket. It also refers to misconduct inside the Commonwealth Bank’s financial planning unit revealed to regulators.
ACR advertised on TV and contacted investors by phone as their notes neared maturity, persuading some people — including pensioners — to invest more. The article recounts multiple stories of investors who lost sums ranging from thousands to hundreds of thousands of dollars after ACR collapsed.
The article criticises ASIC for being slow to act: Fairfax Media’s investigation reportedly found the regulator took 16 months to respond to whistleblower information about misconduct in the Commonwealth Bank’s financial planning unit. The piece argues that investors deserved better and timelier protection.
Yes — the article notes that sometimes victims are partially compensated, planners can be banned, and perpetrators of dodgy investments can be brought to justice. However, it also emphasises that such outcomes have often been too little, too late, usually after the money is already lost.
The author says they have interviewed or received emails from dozens of victims over 13 years and that billions of dollars have been lost. The article stresses that there are 'many, many more' cases beyond the individual stories recounted.
The article’s main takeaway is that investors should expect better protection from regulators and advisers. It warns that people were often told to see a 'properly qualified financial adviser' or were sold investments presented as 'just like a bank account' — and yet still suffered huge losses — underscoring the need for stronger oversight and consumer safeguards.
Call 1300 880 160
Start a chat
Schedule a call
