The whistleblower in the Commonwealth Financial Planning (CommFP) case, Jeffrey Morris, has claimed the lax approach of the Australian Securities and Investments Commission (ASIC) allowed former CommFP planner Don Nguyen to defraud clients and permitted other CommFP staffers to attempt to cover for his behaviour.
In a 39-page statement submitted to the Senate inquiry into the performance of ASIC, Morris outlines the chronology of events but states in the introduction that “all the conduct in the Nguyen/CommFP/Commonwealth Bank Australia (CBA) affair happened on ASIC’s watch”.
“It was the slack regulatory regime of ASIC that allowed Nguyen to operate as a Financial Planner in the way that he did and encouraged CommFP and in turn CBA, to believe that they could, with impunity, cover up what had occurred and defraud the innocent victims of the compensation to which they were rightfully entitled.”
Morris also claimed ASIC was “still attempting to conceal the full culpability of CommFP/CBA in this matter”.
“I submit that, as the ineffective regulator responsible for the industry, ASIC has a fundamental conflict of interest in exposing the full extent of the corruption and dishonesty of such a major institution such as CommFP/CBA; as that would in turn be such a damning indictment of their own incompetence and abysmal failure in supervision that it must in turn have implications for ASIC itself.
“ASIC has therefore chosen to ignore the full extent of CommFP/CBA’s malfeasance in favour of lauding itself for the easy wins of imposing an Enforceable Undertaking and banning seven crooked planners - all of whom were actually offered up by CommFP/CBA rather than being caught by ASIC.”
He claimed that ASIC had been propagating the belief that “all was fine with the major players in the advice industry” and that it had to act mainly on the fringes.
“In reality, I think, ASIC believed everything was fine with the big players because that was what the major players were telling them.
“That explains to me their incredible reluctance to act on CommFP, their willingness to accept whatever CommFP told them despite evidence to the contrary and finally why they couldn’t publicly slam the full extent of CommFP’s corrupt conduct in this matter: to do so would have exploded the myth and eroded confidence in them as the regulator.”
Morris also claimed that ASIC did not have the confidence of the whistleblowers who were forced to go the media after anonymous reports to ASIC were ignored for months.
“We then discussed going to ASIC. It is perhaps the most authentic comment on the regard in which ASIC is held in the financial services industry that one of my fellow whistleblowers, at this stage, said simply 'The only problem with that, mate, is that ASIC is shit. They’ll never do anything.’
“We all felt strongly that we had to do something and ASIC seemed the only viable option. I said that they could hardly fail to act if we gift wrapped the whole thing and dropped it in their lap. If necessary, we would force ASIC to do their job by going to the press.”