A Pox on Everyone’s House

by Dr. Andrew D. Schmulow

Money Management, (2014), published electronically.

Andy Schmulow argues that the controversy surrounding ASIC and its handling of the Commonwealth Bank have seriously damaged the financial planning industry and left few people deserving of any real credit.

The scandal engulfing the Commonwealth Bank (CBA) and the Australian Securities and Investments Commission (ASIC) does no one any good – least of all financial planners who work hard to serve their customers, and who scrupulously put their customers’ best interests first.

The facts become more tawdry with every passing day. ASIC has failed demonstrably in its remit, and has let down the Australian public badly.

First, ASIC failed to act upon the voluminous information provided to it by whistle-blowers, who placed themselves and their careers at risk. Second, ASIC failed the victims of the CBA financial planning division, who were desperate – precisely the people that ASIC was created to protect. Third, ASIC allowed itself to be misled by CBA as to whether there was a problem at all.

For a Commission charged with investigating malfeasance, to have placed such faith in a bank, where there was prima facie evidence of criminality, is both depressing and pathetic. Under questioning, an ASIC deputy commissioner conceded he was concerned that legal advice to victims would be prohibitively expensive for the CBA! Not, mind you, concerned with the costs to consumers of CBA fraud.