CommFP says ASIC always knew
Commonwealth Financial Planning (CommFP) has provided a Senate Committee with documents it says proves that the Australian Securities and Investments Commission (ASIC) was well aware of the extent of its compensation arrangements.
The documentation, published on the Senate Committee's web site raises serious questions about why neither ASIC chairman, Greg Medcraft nor his deputy, Peter Kell, were made aware of the extent of CommFP's arrangements and the role of ASIC's own officers and why the regulator's original submission to the committee ultimately proved to be misleading.
ASIC chairman, Greg Medcraft last month issued a statement expressing concern that the regulator had been misled and foreshadowing the imposition of license conditions on CommFP and Fianancial Wisdom.
Money Management understands that at least a part of the problem was owed to staff turnover within ASIC and the fact that key personnel involved with CommFP in working through the compensation arrangements had left the regulator and this is something made clear in CommFP's answers to questions on notice from the committee.
Those answers make clear that ASIC personnel were well aware of the processes being pursued by CommFP in 2010 and 2011 and that regular meetings were held between the banking group and the regulator, "typically monthly".
The answers point to an "iterative" approach to the compensation arrangements, but in the context of ASIC being consulted at each step.
The CommFP answers to the committee argue that ASIC took "a quite siloed approach to each remediation project with the projects only coming together, with a significant number of staff shared across them, in 2011".
"Turnover of ASIC staff throughout the projects was considerable," the answer said. "We believe this made it difficult for ASIC to have an overview of the projects as a whole as well as a deep understanding of the phases and development within each project despite communication with them.
The CommFP answer then notes that ASIC is involved in similar processes with other licensees but that they have not been required to fund independent legal, accounting and financial advice or to notify all customers regardless of whether compensation is payable.
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