ASIC Final Report

Senator WILLIAMS (New South Wales) (15:46): I congratulate Senator Bishop on doing a magnificent job chairing the Senate Economics References Committee inquiry into the performance of ASIC. When we kicked off I thought Senator Bishop might have been wondering whether this inquiry was really necessary, but he certainly changed his attitude as we went through it. I could tell some stories about Senator Bishop's deep involvement in this whole inquiry into ASIC.

The committee has made 61 recommendations. In my six years in this place I have never known there to be so many recommendations from a Senate inquiry. Perhaps there have been more, but it is an enormous number of recommendations. One of the things we touched on was raising the standards of financial planners. I find it amazing that, as I said in Senate estimates, you can walk out of a shearing shed, do an eight-day—not eight-week—crash course and you qualify under the Corporations Act to be a financial planner; you can advise someone how to invest their millions after only an eight-day crash course. Who can become a solicitor after an eight-day crash course, or a doctor or a surgeon, or a liquidator or an accountant? We strongly recommend raising the bar for the standards of financial planners.

ASIC needs powers. One thing I look forward to, and hopefully it will be pursued by the government, is licensing every financial planner in Australia—some 30,000. They would pay an annual fee, user pays, to finance ASIC, because at the moment ASIC is spending $33 million a year policing the financial planning industry, yet it is collecting less than $3 million in licensing fees. We need to reduce compliance costs for financial planners so that we do not face a situation where Australians cannot afford to seek financial advice, because it is vital that they do. Only one in five Australians seek financial advice, and we need to raise that enormously—especially given that some 30 per cent of superannuation funds now are self-managed—some $600 billion is self-managed—and these people need good advice so they can grow their superannuation and not be a burden on the taxpayer when they get to retirement.

Along with those licences I would like to see the powers given to ASIC as recommended so that with one phone call they can suspend a financial planner's licence. If they collect and collate the evidence of serious wrongdoing—fraud, forgery et cetera—they should have the power to make one phone call and put that person out of business. Of course that financial planner should have the right to appeal to the Administrative Appeals Tribunal—everyone has the right to appeal.

Whistleblowers were a factor in the inquiry. We did have in camera witnesses, and I have serious concerns about Macquarie Private Wealth. I urge ASIC to go in and make sure Macquarie Private Wealth is doing exactly what they should be doing with their enforceable undertaking, so that the wrongs are righted. We recommend that ASIC's funds be topped up for their legal action. It is expensive to go to court, and we must have a regulator who has the money behind it to do its job.

One of the great challenges we face now is to restore faith in the financial planning industry. I believe 99.9 per cent of financial planners are excellent, honest and do the right thing. Like with anything, it is the minority that destroys an industry's reputation. Let us get that figure to 100 per cent. As Senator Bishop said, we need ASIC to be proactive—we need them to be harsh, we need them to be forceful. We need to get rid of the shonky products for sale out there that investors may face. I was on the inquiry into Storm Financial. Storm Financial was destined to fail. Once the stock market went down some 20 per cent, it was a basket case. Those products should never ever have been out there for sale, and so much harm and damage was caused to so many people, many of them elderly, in the twilight years of their life. They had to face being kicked out of their homes—what a terribly stressful time they must have had. ASIC did do some good work in relation to that. We need to get rid of the bad products and clean out the bad planners. I encourage ASIC, where they see clear evidence of wrongdoing, to consider referring these matters to the DPP for criminal charges to be laid. Some of the evidence I have seen shows clearly that forgery and fraud were involved. People who undertake serious criminal activities like that must face a judge and jury.

In summary, it was a very interesting inquiry. I thank all senators involved—I thank Senator Bishop once again for chairing the inquiry and the way he carried out the inquiry; I thank Senator Whish-Wilson for his input into the inquiry, as well as Senator Xenophon and Senator Dastyari and others. I thank Kathleen Dermody and her staff, who worked so hard. There were 460-odd submissions—a lot of work for the secretariat and a lot of reporting. They did a magnificent job. Let us hope that following this report we in government act to see that people in Australia can have total confidence in financial planners in the future. I am sure we will get a good result, and ASIC will do its job better. There is certainly plenty of room for improvement. The Commonwealth Bank admitted their wrongdoing, and Mr Turner at their AGM said their culture was wrong, their policy was wrong and their advice was wrong, and they need to carry out their duties with their enforceable undertaking and see that people are compensated correctly. As I said, Macquarie ought to have a look in the mirror as well.