Gaps and loopholes confirmed in financial services regulation

Gaps and loopholes exist within the regulatory framework underpinning Australia’s financial services regulators.

That appears to be the bottom line of a decision by the Australian Information Commissioner to deny the Victims of Financial Fraud (VOFF) group material pertaining to the Australian Prudential Regulation Authority (APRA) and its handling of the Trio Astarra collapse.

The VOFF has released extracts from a letter from the Australian Information Commissioner explaining the refusal of a Freedom of Information request.

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The letter stated: “If this material were released, it would allow persons with malicious intentions to identify gaps and loopholes in the legislation that limit APRA’s powers as the relevant regulator”.

“This would then enable such people to more effectively exploit these gaps and loopholes, prejudicing APRA’s effectiveness as a regulator,” the letter said. “I have considered the age of the document, but consider that a risk in releasing this information still exists.”

The letter has prompted the VOFF to write to the Minister for Revenue and Financial Services, Kelly O’Dwyer asking why such serious weaknesses in the regulatory system have been allowed to continue to exist.

“The hard work of the Banking Royal Commission might be just a token gesture if the structural weaknesses that remain in the financial system allow a multi-million or multi-billion dollar fraud in the near future,” the letter said.

The letter to O’Dwyer ends on the note that the Trio victims deserve to have an honest and accurate account of the systemic failure around Trio.

“What is urgently needed is an independent investigation or a judicial inquiry into the handling of Trio by the Australian Securities and Investments Commission (ASIC) and the Minster for Superannuation and Financial Services,” it said.

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