Australian Securities and Investments Commission (ASIC) deputy chairman Peter Kell has defended the regulator’s actions in assessing illegal activity and conflicts of interest within Commonwealth Financial Planning (CFPL).
With the watchdog facing a Senate inquiry over it’s handling of the high-profile investigation, Kell said ASIC welcomed the opportunity to explain “what we do, what we have achieved and what we seek to achieve”.
In his opening statement to the Parliamentary Joint Committee (PJC) on Corporations and Financial Services he defended the time taken by the regulator to resolve the CFPL case.
“CFP was a complex matter and cases like this involve much background work before a public result is achieved. That is how law enforcement works. ASIC has to also carefully assess information presented to us and make judgments about what would stand up in court,” he told the PJC.
Kell added that the media had every right to shine a light on the conduct at CFPL but reminded the PJC that the incident has occurred five years ago and that financial planning has come along way since then.
“There was unacceptable and unlawful conduct at CFP. Clients were given inappropriate advice and many suffered badly because of it,” he said.
“And that is exactly why ASIC took serious enforcement action.”
Protection for whistleblowers
To date ASIC has banned seven CFPL advisers, set up a compensation system and forced the company into an enforceable undertaking that required it to change the way it does business.
On the topic of whistleblowers, Kell said ASIC cannot and will not discuss whistleblower involvement in any particular case.
“What person would approach ASIC if they suspected we might discuss their case with a newspaper reporter? In fact, we go out of our way to protect whistleblowers and several years ago successfully fought a case in the federal court to conceal someone’s identity,” he said.
“More broadly, and as this committee knows more than most, there is major law reform underway for the financial planning industry, largely in response to major mis-selling episodes.
“Conflicts of interest, arising from commission-based payments, were at the heart of the problems with CFP. The Future of Financial Advice reforms, which start in a few weeks, include a prohibition against commissions going forward and there will be a new duty to act in the client’s best interest.”
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