Wealth boss questions ASIC’s litigation agenda

Wealth boss questions ASIC’s litigation agenda

James Mitchell
— 1 minute read

A number of industry leaders including a wealth management CEO have debated whether ASIC’s new enforcement approach following the royal commission will actually bring about effective outcomes.

Speaking on the Investor Daily Live webcast on Wednesday (3 April), Lifespan Financial Planning chief executive Eugene Ardino said that while the royal commission hearings were damning of poor culture among licensees and management, the final report did not reflect it.                                  

“The BEAR rules were already in place prior to the royal commission. I don’t think anything came out of the royal commission from any of the 76 recommendation that means there will be any more action or accountability of management,” Mr Ardino said. “I thought that was a little bit of a letdown. They touched on culture but not really. 


“The royal commission for seven or eight months highlighted a lot of issues about poor culture and poor oversight. But when the recommendations came out, there wasn’t really anything that recommended change and would make it less profitable to do the wrong thing. That’s what you ultimately need to drive cultural change.”

Fellow panellist and APAC regional bureau chief at Thomson Reuters Nathan Lynch disagreed with the dealer group boss, arguing that commissioner Hayne made it “absolutely clear” that poor culture would not be tolerated. 

“What he has done now is shone the light on individuals in a very public way and there is a message that if organisations fail with things like BEAR, it will be pinned back to individuals,” he said.

Mr Lynch added that ASIC’s new ‘why not litigate’ philosophy, driven by Hayne’s criticism of the regulator’s historical approach to enforcement, is one example of how the royal commission will drive cultural change in wealth management.  

“If you look at ASIC moving from an enforceable undertaking (EU) approach, which was focused around remediation, and to be fair EU’s were really good at that, the final report highlighted that there weren’t really consequences for stuffing up. You just gave the money back and went on and did it again. That’s where we are seeing change,” he said. 

However, Lifespan CEO Eugene Ardino questioned ASIC’s new approach. 

“My initial feeling is that often litigation is avoided because it takes a long time, courts can be unpredictable and it’s incredibly expensive. It will be interesting to see how long the cases before the courts will take and what the outcome will be. I don’t necessarily believe that litigation is going to be the solution. But we’ll see,” he said. 

Former ACCC chairman Graeme Samuel, who co-authored APRA’s extensive report into the Commonwealth Bank, also disagrees with the royal commission’s recommendations for more litigation. 

Speaking at the AFR Banking and Wealth Summit in Sydney last month, Mr Samuel said he’s not devoted to the court process. 

“It can be very complex, it can be gamed, and let’s face it: no matter how many millions of dollars the government gives the regulators, in the end big business has a lot more dollars to game the process,” he said. 

Rather, he suggested that ASIC use a broad range of tools including prosecutions, hefty fines and court-enforceable undertakings.


Wealth boss questions ASIC’s litigation agenda
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