The Australian Securities and Investments Commission has been lashed over its failure to investigate the claims of whistleblowers at the centre of Commonwealth Bank's financial planning scandal.
In a heated exchange at a Senate estimates hearing, Nationals senator John Williams slammed ASIC deputy chairman Peter Kell over a 16-month delay between the time whistleblowers approached the corporate regulator and ASIC's move to seize the files of CBA financial planner Don Nguyen.
The hearing follows a Fairfax Media investigation that found the CBA had concealed improprieties by a financial planner who once controlled about $300 million in retirement savings on behalf of at least 1300 clients. Advertisement
The misconduct by Mr Nguyen, who has been banned by ASIC for seven years, allegedly includes forging client signatures, creating unauthorised investment accounts and overcharging fees. Some clients lost more than half their life savings, forcing them to seek help from Centrelink as they battled with CBA for compensation.
Senator Williams compared the case to that of insolvency practitioner Stuart Ariff, jailed for six years in 2011 on fraud charges. "To me this sounds like Stuart Ariff Mark II," he said.
Whistleblowers contacted ASIC by fax about Mr Nguyen's activities on October 30, 2008, but ASIC did not investigate the allegations until the whistleblowers visited ASIC's offices in early 2010.
Fairfax Media found that some bank staff took part in a cover-up that allegedly included falsification of documents after Mr Nguyen left the bank in an apparent bid to stall or limit compensation amounts.
"I believe in that fax it said there was some urgency in ASIC securing the files as they are being cleaned up. Why did it take ASIC 16 months to follow up on that fax, and numerous emails from the whistleblowers, to act in relation to the Commonwealth Financial Planning files?" Senator Williams asked.
Mr Kell declined to comment on the timing of ASIC's investigation but defended its handling of a "large and complex matter".
"It has been a landmark achievement that has completely changed the way the bank does business," Mr Kell said.
Leadership of the bank's financial planning division "was changed wholesale", he said, and $23 million had been recovered for 202 investors, with nine more cases to be finalised.
He refused to say whether ASIC would refer allegations that signatures had been forged on some documents to police – "it's very difficult to comment on hypotheticals".
Senator Williams responded: "There are $1.3 trillion in superannuation funds in our nation, and this nation is going to rely on good, sound, clean advice for financial planning. You are the corporate watchdog, and I expect you, if you see wrongdoings and criminal acts, you report them."
