In an open letter to Minister Bill Shorten, who was previously minister for financial services between 2010 and 2013, the organisation Victims of Financial Fraud (VOFF) stated that the two upcoming inquiries into ASIC was an opportunity for the government to act in the public’s best interests and help prevent financial crimes in Australia.
VOFF referred to a report released by economist John Adams of Adams Economics which revealed that reports of alleged misconduct submitted to ASIC have approximately a one per cent chance or less of being officially investigated.
Following the report, Senator Andrew Bragg announced at the end of last month that the Senate had commissioned a new inquiry into ASIC.
The inquiry will look at the capacity and capability of ASIC to undertake proportionate investigation and enforcement action arising from reports of misconduct.
Senator Bragg stated that by establishing the new inquiry, the Senate was supporting consumers and small business and giving Australians a voice.
The Parliamentary Joint Committee on Corporations and Financial Services is also undertaking an inquiry into ASIC’s capacity and capability to respond to reports of alleged misconduct. That inquiry will be chaired by Senator Deborah O’Neill.
VOFF said the two inquiries into ASIC’s handling of complaints was an opportunity for the government to act in the public’s best interest and “help stop the continuation of lies and misinformation that protects financial crimes in Australia”.
The organisation stated that ASIC had a history of being reluctant to act against misconduct in the financial services industry.
The letter referred to the collapse of Trio Capital which impacted both large APRA-regulated funds and SMSFs.
VOFF stated that following the collapse of the scheme, Trio victims were divided into two groups, the union run superannuation funds that lost money through no fault of their own and second group consisting of SMSF trustees and self-directed investors.
While the government provided $71.7 million in compensation to eligible investors, SMSF and self-directed investors did not receive compensation.
This division, the letter stated largely benefited APRA-regulated funds at the expense of the SMSF sector and SMSF investors.
“APRA regulated funds [..] gained from the harm done to the second group. That harm became a market signal, warning that the SMSFs are dangerous,” the letter stated.
VOFF also noted that ASIC failed to provide any evidence of where the millions of dollars from the Trip scheme collapse had gone.
“The tactics of disadvantaging one group for the benefit of another, based on baseless insults or the unlawful use of ‘caveat emptor’ when legal precedents state ‘caveat emptor has no application where contract is induced by fraud’ are no longer tenable,” it stated.
“Nor is it tenable for ASIC to fail to ensure all consumers get treated equally, respectfully and lawfully.”
The letter also referred to the recent investigation by ABC’s Four Corners into the ‘Wolf of Woy Woy’ where consumers were encouraged to invest in a business only to see their money disappear. VOFF said ASIC also failed to act against this scheme.
