Much of the information revealed about misconduct in NAB’s financial advice network late last month was new to the Australian Securities and Investments Commission, the regulator has admitted.
Reporting to the Senate Economics Legislation Committee last week, ASIC Deputy Chairman, Peter Kell, said the regulator was not aware of much of the information reported by Fairfax Media in relation to NAB’s advice issues. This is despite the regulator having commenced a specialist wealth management project to focus on the banks last year, following the CBA advice scandal.
Among the details that ASIC said it had not been made aware of was the identity of the 37 advisers terminated by NAB over the last few years.
Mr Kell told the hearing he was unable to confirm whether a breach notice had been lodged by ASIC for any of the 37 terminated advisers because the regulator had not been supplied with their names. He advised that, following the media allegations, ASIC had issued NAB with a formal notice to provide the details of the terminated advisers by the end of February.
“I am not in a position to run through exactly where our investigations might be up to, but in relation to these 37 advisers, that is the first piece of information we sought. Basically, who are they? What is the conduct involved? We will then check whether there are breach reports provided and assess the nature of the conduct,” Mr Kell said.
The fact that a planner is terminated does not necessarily give rise to an obligation to provide a breach report
When questioned by Senator Sam Dastyari about why breach notices would not have been issued, ASIC Senior Executive Leader, Financial Advisors, Louise Macaulay, explained that not all terminations would give rise to a breach report.
“The fact that a planner is terminated does not necessarily give rise to an obligation to provide a breach report. The law says it needs to be a significant breach of the licensee’s obligations. The termination of a planner does not, in every instance, give rise to a significant breach of the licensee’s obligations. That is something that the licensee needs to determine,” Ms Macaulay said.
ASIC has previously raised concerns about the quality and timeliness of breach reporting (see: Breach Reporting on ASIC Radar). Mr Kell reiterated this position to the Senate Committee, saying:
“…we think the quality of breach reporting across the sector is not at a standard that we would like to see. We have also highlighted the fact that we think that the actual legal test for breach reporting needs to be improved as well. We have very much put the industry on notice that they have to take their responsibility to breach report far more seriously and become more effective at it. We are, therefore, seeing better quality, more timely breach reporting coming through.”
Riskinfo contacted ASIC this week to determine whether NAB had complied with requests to supply the names of the 37 advisers that had been terminated. A spokesperson for ASIC said the regulator continued to have contact with NAB Wealth to receive the information in the stated timeframes but that it did not intend on providing a running update on the investigation.
Meanwhile, NAB’s Head of Wealth, Andrew Hagger, and CBA whistleblower, Jeff Morris, are scheduled to appear before the Senate Economics References Committee on Friday 6 March as part of the Committee’s Scrutiny of Financial Advice inquiry.
It was revealed during last week’s Senate hearing that Mr Morris had written to ASIC in 2010 about concerns he had over the conduct of one of NAB’s advisers, but that the communication had failed to instigate a full-scale investigation by ASIC.
When ASIC deal with the big boys at the banks why is it that the managers of their financial planning arms don’t receive a banning order, like the smaller groups who are hunted down like dogs for small breaches! Good small businesses have been ripped apart due to ASIC’s investigations! ASICs whole process is out of proportion as they are just looking for runs on the board! Look at the Astarra/Trio scandal as they are still saying it’s bad advice all the way through and nothing to do with a fraudulent fund which they let slip through unnoticed until it was too late! ASIC need to make sure they have the same rules for the small groups and the large ones otherwise this is just another government agency patting themselves on the back for all the wrong reasons.
So once again, because the Banks F%$K up, its the adviser that gets pout through the wringer !!!!!
Effectively the Bank Planners are the “drug mules” of the Financial Planning industry (which are expendable) just to keep making more money for the big boys at the top including shareholders. This way they can never be caught or charged and just accept that there will be some collateral damage along the way!
I am perplexed as to why ASIC did nothing in 2010 when the whistle-blower wrote to ASIC “about concerns he had over the conduct of one of NAB’s advisers” Obviously it was something to investigate immediately. Now that the matter has blown out to millions of $$$ in compensation payment ($15 million?) ASIC will start looking for more ways to regulate financial advisers.
How? By imposing more paperwork on financial advisers – and with greater impact on those who run their own businesses.
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