May the will power be with you
Jack Flader, the US lawyer named as being connected to the Trio/Astarra collapse, now knows what it is like to be thrashed with a damp lettuce leaf.
Because that is what the Government’s ‘Comprehensive response to combating superannuation investment fraud’ actually amounts to. It represents a very belated attempt to close and then bolt a stable door when the horse has not only bolted but is actually grazing comfortably in a hard-to-reach jurisdiction.
This is not to belittle the efforts of the Parliamentary Joint Committee (PJC) which reviewed the Trio/Astarra collapse or the efforts of Richard St. John in investigating the matter and producing his report on compensation arrangements for consumers of financial services.
Rather, it is to reflect that the Government’s response as outlined by the Minister for Financial Services, Bill Shorten, will change nothing.
Just as the Future of Financial Advice (FOFA) changes will not prevent a repeat of the Storm Financial collapse, the Government’s approach with respect to Trio/Astarra will not, of itself, prevent an act of wilful criminality.
Via its FOFA changes and by implementing a number of the recommendations of the PJC and St. John report, the Government has increased the powers of the regulators – the Australian Securities and Investments Commission (ASIC) and the Australian Prudential Regulation Authority (APRA).
But vesting those bodies with increased powers is not necessarily the issue. The issue is the capacity and willingness of the regulators to then exercise the powers that already exist.
It may not suit the narrative of either the Government or the regulators, but it is arguable that both ASIC and APRA possessed sufficient powers to act on both Storm and Trio/Astarra before they reached critical mass.
Despite this, both chose to focus on their own procedural constructs rather than acting to proactively protect the interests of investors.
There was and is nothing in the relevant legislation which would have prevented the regulators from acting – simply their own regulatory interpretations.
This, of course, raises the question of whether the regulators were sufficiently alert to the risks which existed to investors’ funds.
While his successors may espouse a different view, former ASIC chairman Tony D’Aloisio put the regulators’ notion of dealing with such issues succinctly when he likened them to being policemen who cleaned up after an accident occurred.
So the question which both politicians and investors must ask themselves is whether the regulators will be prepared to utilise the increased powers they have been granted to protect investors from collapses and illegality before they occur.
In the meantime, it seems Mr Flader is continuing to enjoy his salad days.
Recommended for you
In this episode of Relative Return, host Laura Dew chats with David Russell, chair of the Transition Pathway Initiative, and Tony Campos, head of sustainable investment at FTSE Russell, about the intricacies of climate investment.
In this episode of Relative Return Unplugged, hosts Maja Garaca Djurdjevic and Keith Ford, along with special guest Steve Kuper, discuss a whirlwind start to US President Donald Trump’s second term that all but kicked off a trade war.
The emergence of DeepSeek, a Chinese artificial intelligence (AI) start-up that claims to have built an advanced large language model in just two months for under US$6 million, sent shockwaves through the AI world and cratered US tech stocks.
Donald Trump’s presidency has already begun reshaping the corporate and political landscape in the US, with executive orders rolling back diversity, equity, and inclusion (DEI) initiatives and clean energy efforts.
