ASIC blows whistle on standards

Employees are dobbing in their employers for misconduct at a record pace, invigorated by the outcomes of the Commonwealth Financial Planning scandal, according to the Australian Securities and Investments Commission.

In the regulator’s third submission to the Senate Economics Committee’s inquiry into its own performance, ASIC said it received 845 reports of misconduct from current employees against their employers in the year to June 30, 2013. Of these, 371 were analysed and assessed for no further action, 105 were resolved, 115 were not within ASIC’s jurisdiction and a further 129 were referred for further investigation and action.

It said its work in relation to Commonwealth Bank of Australia’s Commonwealth Financial Planning was “central to the instigation of this inquiry”. The investigation has seen seven advisers banned and over $50 million paid in compensation as well as “wholesale change in the manner and culture in which advice is now provided by Commonwealth Financial Planning”.

The submission, which was tabled in parliament on Thursday, called on the government to consider sweeping changes to improve the treatment and protection of informants by extending the definition of whistleblower to include a company’s former employees, financial services providers, accountants and auditors, as well as unpaid workers and business partners.

It also urged the government to amend legislation to ensure ASIC could not be forced to produce a document revealing a whistleblower’s identity unless ordered by a court or tribunal, and following certain criteria.

ASIC said the current whistleblower protections were not sufficiently clear as to when it could resist the request to produce documents revealing an informant’s identity. The protections also did not cover information relating to all of the types of misconduct ASIC investigated and therefore needed to the expanded.

The regulator submitted nine key issues for the inquiry to consider in order for regulatory barriers and gaps to be addressed. It again called for the introduction of a national exam for financial planners to demonstrate their competence, and greater controls to weed out bad apples from the industry.

“The current system for training and assessing advisers is inadequate and standards need to be lifted,” the submission said.

ASIC will provide another submission before the end of the year.