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22-10-2014, 08:07 AM
Australia a ‘paradise for criminals’
THE AUSTRALIAN OCTOBER 22, 2014 12:00AM
Anthony Klan
Journalist
Sydney
Ben Butler
Margin Call Columnist
Melbourne
THE chairman of the corporate regulator has called Australia a “paradise for white-collar criminals” and said penalties were so low it was “worthwhile” for fraudsters to commit crimes.
Australian Securities & Investments Commission chair Greg Medcraft called on the public to be “extremely careful” when dealing with financial planners, with the regulator visiting the nation’s 30,000 planners, on average, just once in every 30 years.
Mr Medcraft, speaking yesterday at a business journalism awards lunch held by the Walkley Foundation, said ASIC had conducted a review of international corporate crime penalties and established that Australia was well behind its peers and “frankly, we look bad”.
“In Australia it’s worth breaking the law to do the trade, it’s a big problem,” he said.
“Civil penalties for white-collar offences are just not strong enough.”
Mr Medcraft is a former career investment banker who was based in New York as global head of securitisation for Societe Generale for seven years before taking the top job at the corporate regulator in 2009, where he has a remaining term of just over two years.
He is understood to be increasingly frustrated by the federal government, which despite ASIC’s pleas for legislative changes to be implemented has done next to nothing to improve the sector since being elected.
Instead, Finance Minister Mathias Cormann has wound back consumer protection regulation for consumers in favour of financial planners and the major banks and is moving to give financial planners the ability to provide tax advice.
This is despite the financial planning industry being polluted with shonky operators and the ability for an otherwise unqualified person to obtain a government-certified Diploma of Financial Planning in as little as four days.
Mr Medcraft said the poor knowledge base and education levels of financial planners was a “key” concern for the regulator, with many “rent-seekers” in the planning education industry, but it would not push for financial planners to hold university degrees, instead opting for a “national exam” for planners to be introduced.
He said comments earlier this year from ASIC regarding the very low frequency of policing financial planners — on average once in 30 years — was intended as a warning to consumers.
“When we announced that it was a nudge to everyone to be extremely careful,” Mr Medcraft said.
One glaring problem with white-collar crime penalties was that they were not adjusted for inflation.
“In Australia we haven’t indexed penalties to inflation for 20 years: I mean, hello,” he said. “In many cases all we do is give a slap on the wrist and it’s not discouraging bad behaviour.
“We are a paradise for white-collar criminals.”
Senator Cormann said the government did not consider Australia was a paradise for corporate criminals.
“It is ASIC’s job to identify and prosecute any breaches of our corporate laws,” he said.
He did not comment directly when asked whether white collar crime penalties were too low.
“ASIC needs to competently enforce current laws,” Senator Cormann said.
“If the government receives persuasive evidence and advice that there is a problem with the level of penalties we would act.”
The government denied it had wound back consumer protections, but had wound back a catch-all law that required financial advisers to act in the best interests of clients in order to cut “red tape”. However a similar protection remained in the legislation.
THE AUSTRALIAN OCTOBER 22, 2014 12:00AM
Anthony Klan
Journalist
Sydney
Ben Butler
Margin Call Columnist
Melbourne
THE chairman of the corporate regulator has called Australia a “paradise for white-collar criminals” and said penalties were so low it was “worthwhile” for fraudsters to commit crimes.
Australian Securities & Investments Commission chair Greg Medcraft called on the public to be “extremely careful” when dealing with financial planners, with the regulator visiting the nation’s 30,000 planners, on average, just once in every 30 years.
Mr Medcraft, speaking yesterday at a business journalism awards lunch held by the Walkley Foundation, said ASIC had conducted a review of international corporate crime penalties and established that Australia was well behind its peers and “frankly, we look bad”.
“In Australia it’s worth breaking the law to do the trade, it’s a big problem,” he said.
“Civil penalties for white-collar offences are just not strong enough.”
Mr Medcraft is a former career investment banker who was based in New York as global head of securitisation for Societe Generale for seven years before taking the top job at the corporate regulator in 2009, where he has a remaining term of just over two years.
He is understood to be increasingly frustrated by the federal government, which despite ASIC’s pleas for legislative changes to be implemented has done next to nothing to improve the sector since being elected.
Instead, Finance Minister Mathias Cormann has wound back consumer protection regulation for consumers in favour of financial planners and the major banks and is moving to give financial planners the ability to provide tax advice.
This is despite the financial planning industry being polluted with shonky operators and the ability for an otherwise unqualified person to obtain a government-certified Diploma of Financial Planning in as little as four days.
Mr Medcraft said the poor knowledge base and education levels of financial planners was a “key” concern for the regulator, with many “rent-seekers” in the planning education industry, but it would not push for financial planners to hold university degrees, instead opting for a “national exam” for planners to be introduced.
He said comments earlier this year from ASIC regarding the very low frequency of policing financial planners — on average once in 30 years — was intended as a warning to consumers.
“When we announced that it was a nudge to everyone to be extremely careful,” Mr Medcraft said.
One glaring problem with white-collar crime penalties was that they were not adjusted for inflation.
“In Australia we haven’t indexed penalties to inflation for 20 years: I mean, hello,” he said. “In many cases all we do is give a slap on the wrist and it’s not discouraging bad behaviour.
“We are a paradise for white-collar criminals.”
Senator Cormann said the government did not consider Australia was a paradise for corporate criminals.
“It is ASIC’s job to identify and prosecute any breaches of our corporate laws,” he said.
He did not comment directly when asked whether white collar crime penalties were too low.
“ASIC needs to competently enforce current laws,” Senator Cormann said.
“If the government receives persuasive evidence and advice that there is a problem with the level of penalties we would act.”
The government denied it had wound back consumer protections, but had wound back a catch-all law that required financial advisers to act in the best interests of clients in order to cut “red tape”. However a similar protection remained in the legislation.