The corporate regulator has conceded it should have been "quicker and more transparent" in its response to Commonwealth Bank's financial planning scandal, and says it "could and should" have acted faster on a tip-off by whistleblowers.
The Australian Securities and Investments Commission has acknowledged that its dealings with a group of whistleblowers who contacted the regulator with concerns about the financial planning operation in October 2008 were "not adequate".
In a submission lodged with a parliamentary inquiry raking over its performance in the scandal, ASIC has also revealed that it held major concerns about the operation of CBA's financial planning arm by early 2008, but did not make its concerns public.
ASIC's performance on the issue is being scrutinised by a Senate economics committee inquiry, launched in the wake of series of BusinessDay articles that exposed allegations of forgery, fraud and a cover-up by former CBA financial planners including Don Nguyen and Ricky Gillespie. Hundreds of clients are believed to have lost hundreds of millions of dollars as a result of the misconduct. Commonwealth Bank has so far paid out $50 million in compensation.
BusinessDay also revealed that ASIC took 16 months to act on the information provided by the whistleblowers.
ASIC said that it performed "extensive surveillance" on CBA financial planning during 2007 and 2008, uncovering evidence that the quality of advice and standards of practice in the operation were "unacceptable".
Its findings included that planners had made false or misleading statements to clients and had made forecasts that were misleading or deceptive. But ASIC said it chose to deal with the issues on a "systemic" basis, putting in place a so-called continuous improvement compliance program that CBA agreed to adhere to.
In its submission, ASIC admitted that "all stakeholders would have been better served" if it had made public the fact that CBA's financial planning arm had agreed to the compliance program.
"The public would have been informed, staff [including the eventual whistleblowers] would have been aware of ASIC's engagement with the business, and other participants in the industry would have better understood ASIC's expectations and its approach," ASIC said.
"As the process was not public, ASIC was not in a position to explain to the whistleblowers that the concerns raised about [Don] Nguyen had been incorporated into broader work to deal with similar concerns."