Watchdog bears compliance teeth
Ten financial services professionals were jailed, 64 advisers were banned — 19 of them permanently — and 51 civil proceedings were taken against 118 people or companies, in what proved another busy year for the Australian Securities and Investments Commission (ASIC).
Releasing its annual report last week, the corporate watchdog also signalled it will be taking an even tougher stance against compliance breaches next year, after having scaled down its general compliance checking operations in the last 12 months to concentrate on licensing issues relating to Financial Services Reform.
ASIC carried out 509 general compliance checks this year, down from 803 last year.
“Next year you might expect to see us being tougher once people have had some time to come to grips with the law,” ASIC executive director of financial services regulation Ian Johnston told Money Management.
ASIC chairman Jeffrey Lucy said that choice of fund in particular, which will be introduced in July 2005, will prompt the regulator to put “extra effort” into consumer protection.
The watchdog’s annual report showed the 509 general compliance checks included a campaign against preferential remuneration, where eight institutions were monitored by ASIC to assess whether their advisers were biased in offering in-house products.
“We found that advisers did not always disclose adequate information about preferential remuneration. But from what we can see [the institutions] have changed the way they’re paying their advisers,” Johnston said.
The 10 jailed financial services professionals made up a large part of the 28 criminals in total put behind bars by ASIC and included the likes of Mervyn William Mitchell, who received seven years for defrauding his clients of superannuation and retirement funds.
Notable people to have their licences banned included Robert Andrew Street, who transferred client cash to various foreign countries after being duped by a Nigerian scamster.
Civil proceedings brought by ASIC resulted in $101 million being paid out in compensation or fines. Over half of the amount, $67 million, was paid out by National Australia Bank as compensation for 235,000 investors affected by a merger of superannuation funds.
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