Watchdog in the firing line

Senator Williams said it was clear that ASIC had been far too slow to act. Photo: Peter BraigThe corporate watchdog will face a Senate inquiry into its performance that is likely to embroil the Commonwealth Bank and raise questions about the effectiveness of new financial reforms.

The inquiry received strong support from all sides of politics in the Senate on Wednesday. It follows revelations in The Age that the Australian Securities and Investments Commission took 16 months to act on information from whistleblowers about serious misconduct within the Commonwealth Bank’s financial planning unit.

ASIC also failed to act for three years on information provided by CBA in June 2009 about serious allegations of forgery and fraud by a planner, who was allowed to continue to work in the industry during the regulator’s inaction.

A notice of motion for the inquiry was put in the Senate by Nationals senator John Williams and supported by ALP senator Doug Cameron and Greens Senate leader Christine Milne. The motion is expected to pass unopposed on Thursday. Senator Cameron said the inquiry into ASIC would be wide-ranging and, given the scale of the problem, it was ”appropriate for the Senate to investigate a range of issues, including financial planners, the Commonwealth Bank and ASIC”.

Senator Williams said: “I will suggest to the committee that submissions open next month and we can expect to have public hearings later this year”. The committee is expected to report to the Senate next March.

The inquiry’s terms of reference will be wide-ranging and include an examination of corporations legislation and whether it needs to be changed, and a review of the accountability of the regulator, the effectiveness of its complaints management policies and practices and its approach to corporate and private whistleblowers.

Jeff Morris, a CBA insider who revealed his identity to Fairfax Media, said whistleblower protection in his case consisted of ”advising me to get out with what I had left”.

”When you choose to tread the path of the whistleblower, you knowingly ‘take arms against a sea of troubles’,” he said.

”What you don’t expect, though, is for the odds against you to be lengthened by a Monty Pythonesque regulator.”

The CBA whistleblowers repeatedly contacted ASIC from late 2008 but were never asked to participate in an investigation or reveal their identity.

According to Mr Morris, the whistleblowers visited the headquarters of ASIC 16 months later after becoming ”sick of waiting” for action.

Within a month, the regulator had moved to seize CBA files. An investigator later told Mr Morris that if they had not forced the issue their report might still be ”bouncing around”.

Senator Williams said it was clear that ASIC had been far too slow to act.

”The result is financial loss and stress placed on many Australians,” he said. ”Sixteen months to act on the Commonwealth Financial Planning issue is too long. ASIC needs to lift its game and I am hopeful that this inquiry will result in improvements to ASIC and how it performs.”

An ASIC spokesman told Fairfax Media: ”ASIC welcomes any inquiry that might unfold and looks forward to the opportunity of providing the inquiry with information on what we do and what we seek to achieve.”

CBA had declined to comment as the motion had not yet been passed by the Senate, a bank spokeswoman said.

But despite the wide political support for the inquiry, some senators are demanding to know what role the Labor government played in allowing ASIC to become a ”kangaroo court”.

Liberal senator David Johnston questioned the decision by Prime Minister Julia Gillard to give Greg Medcraft, ”a mate”, the $700,000-a-year job of ASIC chairman in violation of the government’s merit-based public sector appointment process.

”What on earth is going on here?” he said in the Senate on Wednesday. ”The corporate regulator is run by someone who has a cloud over them. This kangaroo court of ASIC needs to confront a parliamentary inquiry.”

The inquiry is likely to also investigate new financial reforms that will come into effect on July 1 known as the Future of Financial Advice.

[email protected]杭州夜生活

The original release of this article first appeared on the website of Hangzhou Night Net.