More now on that senate report recommending an overhaul of ASIC claiming in its current form it can't perform its full range of duties. Banking industry Whistleblower Jeff Morris triggered a senate inquiry in 2013. He says a toxic culture at the regulator is partly to blame.
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00:00It's deja vu really, I mean the Senate inquiry in 2013-14 which came out of the revelations
00:10about the Commonwealth Bank and part of those revelations were that ASIC basically was a
00:16corporate lap dog and CBA just tickled their tummy and they rolled over.
00:21So in many ways I blew the whistle more on ASIC than anything else and in fact you can
00:28trace all the misbehaviour in the financial services sector, not just Commonwealth Bank,
00:33the other banks as well, it all came back to the fact that there was a regulator who
00:37was missing in action and that inquiry reported almost exactly 10 years ago in 2014 and in
00:45a 547 page report was absolutely scathing of ASIC.
00:51They made the comment that they were recommending a Royal Commission which they didn't do lightly
00:56because they couldn't trust ASIC to do their job properly in relation to the Commonwealth
01:00Bank.
01:01So we've had condemnation of ASIC in every inquiry that's been undertaken over the years
01:08and indeed in the Royal Commission as well where the Commissioner was highly critical
01:14of ASIC and the fact that they were so timid, they never took on the big end of town in
01:19litigation, little financial planner operating out of the corner store, they might muster
01:25the courage to beat him up occasionally and score a cheap headline.
01:29But I've said, based on my experience from 2008, I've said before, getting ASIC to do
01:38their job was literally like flogging a dead horse, they were just inert.
01:43And so you've heard these scathing words about ASIC before, hearing a couple of these recommendations
01:50does this give you any heart that things are going to change adequately?
01:55Look, I think eventually the cacophony of noise surrounding ASIC's failures, eventually,
02:03surely it can't be ignored any longer.
02:07But as I say, we've had a number of these reports and they're all damning of ASIC.
02:13And I think the comment here is very fair when it says comprehensively failed to fulfil
02:19its regulatory remit, well that says it all.
02:23This is an organisation, in the past I have actually concluded that the existence of ASIC
02:32I think is a negative and so I think it's not just useless, which is what this committee
02:38is basically saying, it's worse than useless because the existence of ASIC with, among
02:43other things, a mandate for consumer protection, misleads people into thinking that it's not
02:48a jungle out there.
02:50We'd be better off without a corporate regulator than a joke regulator because at least people
02:54would be on their guard.
02:55Yes, so this recommendation, recommendation 2 after saying it's a comprehensive failure,
02:59is that it should be split up.
03:01How do you feel about that or as you just said, do you think it needs to be abolished
03:05altogether?
03:06Look, my view has always been that the culture at ASIC is so sick and I saw this up close
03:11as they just failed to do their job.
03:14The culture there is so sick, there's a culture of inertia and they're so complacent and self
03:22satisfied and they do nothing, they do absolutely nothing and again this committee has picked
03:27up on that, yet again another committee has picked up on the fact that they don't actually
03:32deal with misconduct reports.
03:34Most misconduct reports that go to ASIC just get filed and then ignored, they don't act
03:39on them and again, as this committee has found, as previous committees have found,
03:44when they do act, their enforcement action is literally like hitting somebody with a
03:51wet lettuce leaf, it's that pathetic.
03:54So yeah, I mean ASIC is I think irredeemable and the best solution is to start again because
04:02if you don't do that, you're afflicted with the same culture that this organisation has.
04:13And there's a good recent example of that, there's a group, a body that reports to ASIC
04:21was called the Financial Ombudsman Service and so they renamed it AFCA and they expected
04:28things to change.
04:29All the people who were employed at FOSS, which was a complete failure as a consumer
04:34protection body, went across to AFCA and guess what, AFCA has been a complete failure as
04:39well.
04:40So unless you have wholesale personnel changes, ASIC will just continue to fail.
04:44Yeah, so even this splitting up recommendation you think is a bit pointless, you've got to
04:48start from the ground up?
04:50Well yeah, I mean that would be part of it because I think the corporate regulation and
04:56filing company returns, for which by the way ASIC charges outrageous fees and they rake
05:02off this profit which I think disguises a lot of the inefficiency in the rest of the
05:07organisation, absolutely it should be split up but then I think you've got to demolish
05:12the whole structure and build on a sound foundation.
05:16And what about the recommendation about focusing on getting prosecutions?
05:20Oh absolutely, ASIC has run a mile from prosecuting people but the reason for that is they're
05:26so incompetent and I recently observed a case where ASIC had an absolute slam dunk of a
05:33prosecution and they completely bungled it and they lost the case.
05:39And then the witness who'd put themselves on the line to help ASIC do their job threw
05:45them to the wolves as well.
05:46I mean they're a terrible organisation, they have no shame.
05:50Okay, so now after this, another inquiry, the government has an opportunity to address
05:56this significantly.
05:58What's at stake here if something is not done?
06:02Well the same thing will keep happening.
06:05There's been, over the last couple of decades, there's been massive fraud on consumers.
06:12So there were agribusiness investment schemes that were just, they were a joke and if we'd
06:18had a decent corporate regulator who, if they needed more powers to do their job, had insisted
06:23on being given those powers, none of those products should have gone to market.
06:27The financial planning industry was running completely out of control and it was just
06:32a sales channel for ripping off widows and orphans, again all on ASIC's watch.
06:37So unless at some point somebody takes these criticisms seriously and says we're going
06:42to take ASIC apart brick by brick and rebuild it, those problems will just recur.
06:48Maybe four or five years time from now, maybe even sooner but the same cycle will just repeat
06:54because the problem at the end of the day, it's an overall problem.
07:00As Napoleon said, a major disaster implies a major culprit and the culprit in terms of
07:06the disaster that's been our financial services sector is ASIC, the regulator.
07:11What about this recommendation in regards to whistleblowers because as you've been enveloped
07:16by this over the last 16 years, you've worked very hard on the whistleblower front.
07:22One recommendation here, amending whistleblower protection provisions in the Corporations
07:25Act to include pecuniary incentives and compensation for whistleblowers who make a substantiated
07:32disclosure.
07:33Yeah.
07:34Well, what myself and others disclosed about the banks resulted in $10 billion in compensation
07:41being paid to consumers.
07:42Wasn't small potatoes.
07:44There were whistleblowers who were put in hospital through the strain they were put
07:48in.
07:49Many of us were diagnosed with PTSD.
07:51We all lost our careers and so there's easy justification for financial compensation because
07:58when you blow the whistle, your career's over.
08:00You'll never work in that industry again.
08:02People cheer whistleblowers but they don't employ them.
08:05So you really, if you're going into it with your eyes open, you're making a decision to
08:10sacrifice your career for the good of others.
08:13And I don't think it's at all unreasonable that people should be compensated by that.
08:17But hey, in theory, we're already there because this Labor government in 2019 promised compensation
08:24for banking whistleblowers.
08:25I've yet to see any of that.
08:27They've been in power for two years.
08:29So this isn't a big leap.
08:31This is something that the Labor Party committed to five years ago and yet they're still consulting
08:35about it.
08:36It's a constant talk fest and no action ever comes of it.
08:40But I seriously wonder, I think this government is all over the place on whistleblowers.
08:47I mean, this is absolutely what should happen if you want to stamp out corruption, is reward
08:51whistleblowers so more come forward.
08:54But this government, despite talking a big game on whistleblower protection, about six
08:58weeks ago it put a whistleblower in prison.
09:01So amongst the whistleblower community, the Albanese government has less credibility than
09:06any other in living memory after what they've done.
09:10And nobody could trust them.
09:11So even if there were rewards, that wouldn't fix it.
09:14And Geoff Morris, after having been through everything you've been through after blowing
09:20the whistle 16 years ago, and the challenges you've faced since then, would you do the
09:28same thing again now?
09:30I would.
09:31And, you know, I kind of saw fairly early on that this is where it was going to go,
09:36that ASIC was the problem and ultimately to fix the problem that was the financial services
09:42industry in this country, ASIC had to be fixed.
09:46So this report has just, I guess, helped to throw that into even more stark clarity.
09:52And I think every time there's another report that comes out that slams ASIC and reveals
09:58the fact that they basically don't do their job, I think we move a bit closer to some
10:03worthwhile reform.
10:04So I'm glad to see it.