The identities of a select group of highly experienced financial advisers who work with the corporate regulator to support its enforcement actions might not always be widely known in the industry, but in regulatory circles their experience and financial acumen puts them in a league of their own.
How these financial advisers are selected and the role they play isn’t widely understood.
Collins House Private Wealth managing director Dominic Alafaci recalls being tapped on the shoulder for the first time 20 years ago.
Since that first experience, he has been retained by ASIC as an expert witness in financial planning and investment matters, as well as forensic accountants and legal firms over the past two decades on more than a dozen occasions.
The Melburnian recalls being requested to appear before an ASIC Commissioner who was conducting a hearing into a complaint brought by an investors’ accountant in relation to the market movement of the client’s investment portfolio. His written expert report was submitted to the Commissioner and a determination was made.
“Subsequently, I was retained by ASIC for around 12 months to provide an expert report with regard to a banning order being challenged by an adviser at the Administrative Appeals Tribunal,” Alafaci says.
ASIC also retained Alafaci to provide a number of expert reports over almost two years with regard to the appropriateness or otherwise of personal advice provided by a large financial institution and a number of its subsidiaries. He has also worked closely with forensic accountants to provide an expert opinion on the institution’s remediation process.
Alafaci has been elected as a non-executive director of the Financial Planning Association and appointed to the Financial Industry Complaints Service initially representing financial planners and stockbrokers.
Tasmanian financial adviser Wes McMaster has also been engaged by ASIC on a number of occasions since his first stint with the watchdog in 2007. Regarded as an exert on the principles of financial advice, he has published a paper defining many of the principles of financial advice, which is often used as a reference in litigation cases.
McMaster says he’s been asked for his opinion on a number of interesting issues ranging from the Westpac collapse to the Storm Financial case and is also engaged by many law firms to provide expert opinions in the litigation of financial advice.
“The capacity in which they have engaged me has been as an expert on the principles of financial advice including the obligations of Australian Financial Services licensees,” he says.
Availability to serve
According to financial advisers who have been engaged by the Australian Securities and Investments Commission (ASIC), there isn’t a formal pathway to becoming an expert witness.
But Alafaci says “building a professional reputation following the undertaking of relevant tertiary training, joining appropriate professional associations and making oneself available to serve on semi-government bodies, as well as having significant relevant experience” are steps along the way.
A spokesperson from ASIC says how it engages with expert financial advisers isn’t something it would ordinarily comment on publicly, but did say that financial advice and other experts engaged in court actions are retained in accordance with the rules of the relevant court or tribunal.
In certain circumstances, the expert witness may be retained to express an opinion that may be relied on in alternative dispute resolution procedures, or may be appointed as an independent adviser to the court.
The role of the expert witness is to provide relevant and impartial evidence in his or her area of expertise. They need to be willingly prepared to change their opinion or make concessions if necessary or appropriate.
Often utilised in complex subject matter, the admissibility of expert evidence needs to be relevant, but could be reduced to be admitted by the court.
While it’s likely that the next financial advice controversy is just around the corner, there could be opportunities for others in the industry to be secured by ASIC in the very near future.
But it’s very unlikely you’ll hear about it.
