ASIC and Money Lenders must be examined by a Royal Commission

Independent JLN Senator for Tasmania Jacqui Lambie has called for a Royal Commission to closely examine the performance and practices of all the major players of Australia’s Financial and Banking sectors, including the government corporate watchdog, the Australian Securities Investment Commission (ASIC).

“The opponents of a Royal Commission like to use the excuse that ASIC is the tough cop on the beat – and a competent enough corporate watchdog to deal with systemic corruption in the banking, insurance and finance industries.

However, after questioning ASIC officers during Senate Committee hearings - my view is that, instead of behaving like tough cops, ASIC has acted like the Keystone Cops.  ASIC’s Senate Committee answers show that the government’s corporate watchdog is either dysfunctional - or covers up for the big end of town,” said Senator Lambie.

Click below to view Senator Lambie’s questioning of ASIC

“A strong worldwide case has been made that high frequency share traders (HFST) - using super computers, have an unfair technical advantage over ordinary mum and dad investors. Independent Australian studies show HFST annually skim between $3B to $4B - from mum and dad share market investors.” said Senator Lambie.

“ASIC is well briefed about the international and national financial rorting allegations made against HFST.  During my Senate questioning – ASIC conceded that there are only 6 High Frequency Share Traders who account for almost 30% of Australia’s share market.

However, when I asked for ASIC to provide the names of Australia’s versions of America’s HFST or Flash Boy Traders (who account for 70% of the US Share Market) – ASIC pretended that they didn’t know those Australian companies names.

How could Australia’s so-called tough cop on the corporate beat - not know the names of the 6 Australian companies which account for almost 30% of our share trades? Is that incompetence, or a cover-up?  Only a Royal Commission investigation will find out,” said Senator Lambie.

Senate Standing Committee on Economics adverse findings on ASIC

“My personal observations only reflect the damming findings of the Senate Standing Committee on Economics which noted in 2014 that case studies found in relation to ASIC:

  1. Has limited powers and resources but even so appears to miss or ignore clear and persistent early warning signs of corporate wrongdoing or troubling trends that pose a risk to consumers;
  2. Consumers have unrealistic expectations of what ASIC can do and the extent to which the regulator is able to protect their interests or investigate their complaints;
  3. ASIC's communication with retail investors and consumers needs to improve significantly;
  4. As a timid, hesitant regulator, too ready and willing to accept uncritically the assurances of a large institution that there were no grounds for ASIC's concerns or intervention. ASIC concedes that its trust in this institution was misplaced.
  5. As the committee gathered more and more evidence, however, lingering doubts began to grow about the robustness and fairness of the ASIC-sanctioned compensation process for CFPL clients who had suffered losses because of adviser misconduct.
  6. ASIC was too slow in realising the seriousness of the problems in CFPL, instead allowing itself to be lulled into complacency and placing too much trust in an institution that sought to gloss over its problems;
  7. ASIC did not pay sufficient attention to the whistleblowers who raised serious concerns about the conduct of Mr Nguyen and the actions of CFPL.
  8. Recent developments, whereby both ASIC and the CBA have corrected their testimony about the compensation process, have only deepened the committee's misgivings about the integrity and fairness of the process.
  9. At this stage, the committee's confidence in ASIC's ability to monitor the CBA's implementation of its new undertaking regarding the compensation process is severely undermined.
  10. The committee identified the need for ASIC to become a far more proactive regulator ready to act promptly but fairly.  ASIC also needs to be a harsh critic of its own performance with the drive to identify and implement improvements.
  11. ASIC's communication with members of the community needs to improve.  In particular, ASIC must be more responsive and sensitive to the concerns of retail investors and consumers.
It’s clear after considering the facts (including slashing $121M from ASIC’s Budget)  - that Liberal members of Parliament who argue that we don’t need a Royal Commission because we’ve got ASIC - are ignoring reality, treating the public with arrogant contempt - and just trying to protect their mates and political donors from the banking and finance sectors,” said Senator Lambie.