Members of failing investment schemes are unwilling to consider they might be in trouble if they are still seeing positive returns, making it hard for the regulator to crack down early.
Appearing before the Senate Economics Committee, Australian Securities and Investments Commission (ASIC), senior executive leader for insurers, Rhys Bollen, was asked why ASIC had not investigated the failing Sterling Income Trust earlier. Bollen said it was difficult to convince people of problems at an early stage if they were still seeing positives from their investment.
“If you ask the investor ‘are you happy?’, and they have the benefit of a roof over their head and they’re living in the residence then they have no reason not to be happy,” Bollen said.
“It’s like if you went to the passengers on the Titanic in the main dining room and asked if they were having a pleasant journey. They would say ‘yes’ but the fact of the matter is there still aren’t enough lifeboats and it is a tragedy waiting to happen.”
ASIC chair, Joe Longo, added people had viewed the investment as attractive which made it difficult for them to accept that it was not as good as they expected. Earlier in the day, Ben Marshan, head of policy, strategy and innovation at the Financial Planning Association of Australia, had told the committee investors viewed the scheme as “their dreams were coming true”.
Longo said: “If things are going smoothly at that moment, it’s very hard for someone to disrupt that decision. If things are going well, they don’t want someone like me or ASIC coming along and telling them they have made the wrong decision and they shouldn’t be enjoying those returns.
“There’s a real ambivalence on the part of investors to face a reality that they didn’t expect to have to face.
“With the benefit of hindsight and knowing what happened afterwards, we could have moved more quickly.”
Comments
Ha ha ha, this is priceless. There are no financial advisers involved for ASIC to blame this time, so who do they blame? The consumer. They wouldn't have wanted ASIC 'telling them they have made the wrong decision' apparently. Cue the Benny Hill music. We need a royal commission into ASIC. It is a broken, pathetic, inaffectual, conflict ridden organisation that needs to be cleaned out.
ASIC moving quickly, really WTF.
The only time ASIC have ever looked to move quickly was to shut Dover down.
Not saying Dover was great but there was zero clients hurt or funds lost from the so called client protection policy fiasco.
Dover were shut down purely because they were aggressively targeting bank advisers so the banks pressured ASIC to kill them.
ASIC are beyond help.
Corrupt, misguided, mis managed and couldn’t lie straight in bed.
In bed they were / are with big banks.
In bed they are with Industry Super.
At the same time killing Real Advisers at every turn for the most minor technical infringements.
How did it go so wrong ????
ASIC needs the swamp cleaned.
Frydenberg has over seen 8 years of ASIC being the worst it’s ever been and he has both encouraged and let it happen.
Frydenberg has to go !!!!
I feel like this is all going down hill
It certainly seems that there is a lot above ASIC's pay scale. So why are they getting paid at all? Due to such clear examples of fee for no service we need a 10 year look back on ASIC. Unless they can prove clear proof how they have improved outcomes for clients in a better position statement they should be individually named, shamed, fined and jailed. Why not litigate?
The gov't need to do a review into ASIC. Their explanation here is appalling. They have simply blamed the consumer here, and not ask how the investment even came to market, or what could be done to prevent this happening.
I'm putting the Titanic analogy into all my future SOA's so when a client complaint gets lodged with asic because the markets gone down, I'll just submit this as my defence, thanks asic, that's public service!
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