ASIC won’t say whether it’s reviewing licences of guilty banks
The Australian 12:00am April 26, 2018
Anthony Klan
More than 18 months after the nation’s biggest four banks were caught fleecing more than 250,000 customers by charging them for advice they never received — and being forced to hand back more than $200 million — the corporate regulator will not confirm whether it is even reviewing their financial services licences.
Under the Corporations Act, enforced by the Australian Securities & Investments Commission, financial services licence holders must adhere to strict rules, with small financial companies having had their Australian Financial Services Licences suspended for offences significantly less serious than those admitted to so far by the big four banks and AMP.
Under powerful laws, documented in hundreds of pages of documents published by ASIC, the regulator can suspend or cancel a group’s AFSL if it doesn’t adhere to strict rules, such as by failing to act “honestly and fairly”, by giving “inappropriate advice” or by failing to “report to ASIC any breaches” of its licence obligations.
As The Australian revealed yesterday, ASIC has said it is investigating whether AMP had breached its licence conditions.
However, yesterday an ASIC spokesman said the regulator would be not commenting “at this stage” on whether it was also reviewing the AFSLs of the CBA, Westpac, ANZ and NAB, despite the $200m those banks have already admitted fleecing from customers, dwarfing the $4.7m so far admitted by AMP.
AMP’s wealth management arm — which raises money from the public via the nation’s biggest network of financial planners, manages $130 billion, and delivered AMP $931m in net cash flows last year — requires an AFSL to operate in Australia.
On Friday, AMP group executive for advice Jack Regan told the royal commission into banks the financial services company had lied to ASIC about 20 times about deliberately ripping off more than 15,000 clients over a decade by charging them for services that weren’t delivered.
ASIC has long been criticised for being too close to the big banks and big institutions — with many of its employees coming from the banks and vice-versa. Whether it actually takes action over the AFSLs held by AMP and the big four banks will be seen by many as a test of whether it has the capability to effectively police the big end of town.
Many smaller finance companies have had their AFSLs cancelled or suspended by ASIC for practices that did not involve fleecing customers, or covering up corruption from ASIC.
Yesterday, professor Ian Harper, who was a committee member of the Wallace inquiry into the financial system, which in 1997 recommended ASIC’s creation, was quoted as saying he now had doubts.
At the time, concerns were raised that ASIC could be “captured” by becoming too close to the companies it regulated and suffer “Stockholm syndrome”.
“We now know of clear cases in which ASIC has been misled,” Mr Harper was quoted as saying.