Does the Australian Securities and Investments Commission (ASIC) really only act when complaints about particular schemes or issues “reach tsunami level”?
That was the somewhat colourful claim made by former financial journalist and ASIC staffer Anne Lampe in a personal submission to the Senate Committee inquiring into the operations of ASIC – and they are claims which members of that committee will likely want to follow up.
Lampe was always robust in her reporting for the Sydney Morning Herald, and as other elements of her submission indicated, she was never a particular admirer of the financial planning industry and was scathing in her criticism of those she believed responsible for the collapse of Westpoint and Storm Financial.
However it was Lampe’s translation from working journalist to public relations officer for ASIC which has proved most problematic for the regulator, particularly her suggestion that ASIC could be bureaucratic, inactive and selective in how it handled complaints.
“Whilst working at ASIC’s media unit it was apparent that ASIC received frequent complaints about dodgy and suspect investment schemes as well as lost investments in failed companies,” her submission said.
“These complaints were dutifully logged and filed. Their recording was methodical. The records were well kept. But that is where too many complaints remained – buried in the archives.
“It was only when the volume of complaints and losses about a particular scam reached tsunami level, or investors with losses contacted a member of parliament, or triggered a media inquiry, that ASIC seemed to spring into action.
“At one point it took a government minister’s wife to lose a sum in a property fund to get ASIC to start an investigation into that fund.
"When small investors lost money ASIC seemed incapable of action or didn’t think it necessary. However, if a corporation or big fish reported a trading irregularity, backsides came off their seats quickly.”
These are damning allegations and it behoves those now running ASIC to prove that Lampe is wrong. That may prove difficult in circumstances where much of what she claims seems to be underwritten by the anecdotal evidence.
It is no secret that there were those in the financial services industry who warned ASIC about the problematic strategies being pursued by Storm Financial, and there has already been much evidence given to Parliamentary committees about the speed with which the regulators moved on Trio/Astarra.
Money Management has frequently noted that some previous ASIC chairmen have described the regulator as the policeman who cleans up after an accident.
Clearly, Ms Lampe and many other people who have made submissions to the Senate committee want a more proactive approach. Perhaps they are right.
