Regulatory Storm on its way
IT now transpires that the Australian Securities and Investments Commission (ASIC) did receive four complaints relating to Storm Financial in the period 2006 to 2007. Trouble is, it considered those complaints to be “minor complaints”. Quite simply, the regulator did not consider there was a smoking gun.
That is the bottom line of evidence given to a Senate Standing Committee on Economics by ASIC chairman Tony D’Aloisio late last month.
It would probably be helpful to know, therefore, the exact nature of the complaints received by the regulator and why, precisely, they did not give rise to the sort of investigation that might have helped prevent the interests of many of those investors now suffering large losses.
Once again, it appears to be a case of the regulations rather than the regulator being at fault. It seems that, quite simply, ASIC did not find substantive regulatory breaches.
On that basis, there is strong justification for a thorough review of the circumstances surrounding the collapse of not only Storm but Westpoint, Opes Prime et al to determine where regulatory gaps exist and how they can be appropriately fixed.
Whether the financial planning community likes it or not, it is a given that it will face a tougher regulatory environment as a result of the Storm collapse.
Those people who made the four complaints relating to Storm between 2006 and 2007 will find little solace in the fact that the regulator found no smoking gun. They will only worry that despite having raised their concerns, ASIC then found no reason to act.
Of course, ASIC receives hundreds of complaints a day relating to not only financial planning practices but a broad range of companies. It does not have unlimited resources and it can only act consistent with the legislation and regulations it administers.
That said, the receipt of four complaints in one year about a single company would suggest to many people that a pattern was emerging. This, of course, may raise the broader question of how many complaints a year the regulator actually receives about financial planning practices and what it ultimately chooses to do about them.
— Mike Taylor
AUTHOR
Mike Taylor
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