Watchdog admits delay on CBA warning
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."
Frequently Asked Questions about this Article…
ASIC conceded it should have been "quicker and more transparent" in its response to the CBA financial planning scandal. The regulator said it "could and should" have acted faster on a whistleblower tip-off and acknowledged its dealings with whistleblowers who contacted ASIC in October 2008 were "not adequate."
According to BusinessDay reporting and ASIC's submission to a parliamentary inquiry, ASIC took about 16 months to act on information from whistleblowers. ASIC says it chose to address the issues on a "systemic" basis—putting in place a continuous improvement compliance program with CBA—rather than pursuing immediate public action, but admitted it should have moved faster and been more transparent.
BusinessDay articles exposed allegations of forgery, fraud and a cover-up by former CBA financial planners, including Don Nguyen and Ricky Gillespie. ASIC's surveillance also found planners had made false or misleading statements to clients and produced forecasts that were misleading or deceptive.
The article says hundreds of clients are believed to have lost hundreds of millions of dollars as a result of the misconduct in CBA's financial planning arm.
Commonwealth Bank has so far paid out $50 million in compensation related to the financial planning scandal.
ASIC reported it performed "extensive surveillance" during 2007 and 2008 and uncovered evidence that the quality of advice and standards of practice in CBA's financial planning operation were "unacceptable," including false or misleading statements and deceptive forecasts by planners.
Rather than publicly disclosing its concerns immediately, ASIC chose to deal with the problems on a systemic basis by implementing a so-called continuous improvement compliance program that CBA agreed to follow. ASIC later said stakeholders would have been better served if that arrangement had been made public.
A Senate economics committee inquiry is scrutinising ASIC's performance in the scandal. Launched after the BusinessDay articles, the inquiry is examining how ASIC handled whistleblower tips, the regulator's delays, its transparency, and the broader regulatory response to the misconduct at CBA's financial planning arm.
Call 1300 880 160
Start a chat
Schedule a call
