There is a serious lesson for all financial services professionals, including financial advisers, in the PwC tax policy confidentiality saga – and it isn’t simply to shut up when you sign an undertaking with government.
Set aside for a moment the issues related to confidential tax policy information, and how it may or may not have been used by the tax advisory team in PwC. The principal fact pattern has been explored by every person, his or her dog, and their neighbour’s pet canary to the point of exhaustion.
This case study is worthwhile examining from another perspective, however, because it has become an example of how regulatory regimes can work together – deliberately or inadvertently – to ensure somebody is discouraged from even entertaining a return to the provision of advisory services for which a regulator’s approval is required.
Don’t think for one moment that this is simply a large professional service firm’s soap opera that you have the luxury of watching and tut-tutting about from the sidelines.
The actions taken by the regulators in this instance to firmly shut the door on one person’s ability to practice could be replicated in the case of financial services professionals regardless of whether the firm is a consulting behemoth with offices in multiple cities across the globe, a medium sized practice or even a single principal practice with a handful of staff.
Consider the initial penalties with which former PwC partner Peter Collins was hit by the Tax Practitioners Board that related to the breach of confidentiality reported to the TPB by the Australian Taxation Office.
Collins was a registered tax agent and the TPB terminated his registration following an investigation of the circumstances surrounding the confidentiality.
It also prohibited him from reapplying for a registration for two years. The maximum prohibition from reapplying for registration at the time Collins was pinged by the tax agent regulator is five years.
This needs a little expansion because some commentators have been confused since the TPB ruling came down and called it a suspension.
Collins’ registration no longer exists. It was shredded, cancelled, terminated, and generally made to disappear. A practitioner in Collins’ position would need to reapply for registration afresh.
There is no time limit on the termination with which he was hit and the failure of some people to better understand the regulatory regime when the story first broke minimised the nature of the severity of the penalty Collins received.
One of the things a professional in the crosshairs of a regulator can do is attempt to pre-empt regulatory action and hand back their ticket.
TPB chair Peter de Cure told a parliamentary committee hearing earlier this year that Collins offered to hand back his tax agent registration, but the regulator had other ideas. Disciplinary ideas.
In the case of other registrations and memberships held by Collins, he resigned his membership of the chartered accountants’ body long before the findings from the TPB were announced and reported in the media.
This meant that Collins was unable to get booted from the one of the three main accounting bodies in Australia because he beat them to it.
The other thing that Collins did was to resign his status as an authorised representative for PwC’s securities entity, PricewaterhouseCoopers Securities Limited.
He held that status from two distinct periods. The first period was from: 1 March 2004 to 14 July 2006, and the second and much longer period was from 9 December 2013 to 6 October 2022.
That did not mean that the relevant regulator, the Australian Securities and Investments Commission, was unable to take action to prohibit Collins from working in the financial services space.
The TPB decision was reviewed by an ASIC delegate, and its delegate found that Collins merited additional regulatory action – an eight-year ban.
“ASIC found that Mr Collins disclosed confidential information he obtained in his roles as a tax advisor to the Commonwealth Treasury and the Australian Board of Taxation,” ASIC said.
“Accordingly, ASIC found that Mr Collins is not a fit and proper person to provide financial services and that it was in the public interest to prevent him from working in the financial services industry.”
Let’s recap the fact pattern briefly to find our bearings again given that there is a bit going on here.
The TPB terminates a registration and then prohibits Collins from applying for registration for two years. It is as if his original registration never existed. He would have to meet all tests in the law again to get admission if he were to choose to ever test the application process again.
Transpose the recently announced ASIC eight-year ban on top of the TPB penalty, and the intense political and media scrutiny that has taken place. It would be difficult for anyone to entertain a return to any registered advisory capacity in these circumstances.
There is also the separate and distinct matter of the Australian Federal Police investigation into the confidentiality breach that is yet to conclude.
One further matter merits attention. ASIC’s eight-year ban on Collins was finalised on 17 October and Collins and his legal representatives were given 48 hours to request either a stay or suppression of the outcome of the decision.
That 48-hour period ended at about midday on 20 October – the exact day ASIC’s representatives were due to front the Parliamentary Joint Committee on Corporations and Financial Services with the news.
It does raise the question for those with curious minds as to whether the finalisation of the decision and the timing of the regulator’s appearance were a coincidence.
Tom Ravlic has spent almost three decades analysing corporate and financial services regulation. He has worked as a policy adviser for two professional associations, and as an undergraduate and post-graduate lecturer at two Australian universities.
