Enforcement action against financial services wrong-doers increased in the last half of 2014, but so too did the amount of unpaid compensation following regulatory determinations.
The Australian Securities and Investments Commission (ASIC) has released its enforcement figures for the last half of 2014, reporting 90 enforcement outcomes relating to financial services and advice in the period from 1 July 2014 – 31 December 2014. This figure was nearly double that recorded in the previous six months.
Among the enforcement outcomes achieved in the six months to 31 December 2014 were:
- One instance of unlicensed conduct which resulted in a criminal penalty
- 20 outcomes relating to dishonest or unconscionable conduct and misleading statements
- Three examples or misappropriation, theft and/or fraud
Since it began regularly reporting its enforcement outcomes in January 2013, ASIC has recorded 285 completed actions in the area of financial services.
“ASIC investigates serious white collar crime. We have recently completed several significant enforcement actions after detecting serious fraud by company directors and officers, committed against the companies they serve and the investing public. These results demonstrate that for those who steal and deceive the consequences are great,” ASIC Commissioner, Greg Tanzer, said.
Meanwhile, the Financial Ombudsman Service (FOS) also released its determination figures for the period between October and December 2014. Of some concern is the increase in unpaid compensation from financial services providers following FOS determinations.
As at 31 December 2014, 30% of all the determinations issued in the life insurance, investment and superannuation areas remain unpaid. Of these, 69% relate to disputes in the financial planning and advisory sector.
FOS observed that this is an increase of almost 4% on the figures for the September 2014 quarter, and was caused by the liquidation of a single financial advisory firm being unable to meet its obligations in respect of six determinations totalling almost $1.8million.
In total, nearly $13,000,000 in compensation payments are still outstanding. FOS said this issue affects approximately 174 individuals whose claims the regulator upheld.
During the period between October and December 2014, FOS received a total of 7,853 disputes. Of these, 4.9% related to life insurance. Of those disputes which were resolved in the period, 67% were finalised through an agreement between the financial services provider and the consumer who lodged the dispute.
