ASIC report highlights broker misconduct

by Amy Rosenfeld03 Feb 2014

ASIC has been busy over the past six months cracking down on those in the financial services industry - and brokers have been in the spotlight.

The regulatory body has released its fifth six-monthly enforcement report, showing it took enforcement action 340 times on criminal, civil and administrative misdemeanours between 1 July 2013 and 31 December 2013.

The report highlights the regulator's recent focus on the broker channel, with ASIC commissioner Greg Tanzer revealing ASIC currently has "more than 20 investigations underway involving falsification of loan documents and loan applications".

"ASIC’s crackdown on brokers submitting fraudulent loan applications and similar behaviour has seen several individuals criminally charged or banned," said Tanzer.

A total of 78 enforcements were in the financial services sector, the majority of which (28) were related to credit.

Dishonest conduct, misleading statements and unconscionable conduct accounted for 16 offences in the sector, while 24 offences fell into the category of “other misconduct”.

Tanzer stated the regulator’s current focus areas include “cracking down on misleading advertising of products and services, market misconduct, including insider trading, and the responsibility of gatekeepers”.

“Future areas of focus include loan fraud, false accounting, and takeovers and shareholder disclosure, as well as the ongoing focus on advertising,” said Tanzer.

ASIC also secured enforceable undertakings with a number of high profile companies including NAB, UBS, Wealthsure, BT, and Commsec, said the report.

“Negotiated outcomes, such as EUs, can offer a faster, more flexible and effective regulatory outcome than could otherwise be achieved through administrative or civil action,” Tanzer said.

“Since 1 July 2011, ASIC has entered into 63 EUs with entities and individuals. Many of these enforceable undertakings have required entities to pay compensation to consumers, improve internal compliance arrangements, appoint an independent expert to oversee elements of the entity’s business and report back to ASIC on performance.”

A notable prosecution which ASIC helped with was that of Clestus Weerappah, a former director of Dollarforce Financial Services, who was jailed for four years over his role in the collapse of the property development group.
“The sentence sends a clear message to corporate Australia that ASIC, the community and the courts will not tolerate criminal behaviour,” ASIC said.

Other outcomes that ASIC contributed to include the Federal Court finding five former directors of Australian Property Custodian Holdings liable for breaching their duties, and the Full Court of the Federal Court of Australia upholding ASIC’s appeal against the court-approved $82.5 million settlement between former Storm Financial investors and Macquarie Bank.
ASIC’s work will also see more than $15 million refunded to consumers, said the regulator.
Overall in the financial services sector, there were 12 successful criminal prosecutions, five civil, 34 administrative remedies (such as banning or disqualification), 23 enforceable undertakings, and four warnings issued.


  • by GC 3/02/2014 9:08:04 AM

    Still no mention of ASIC looking into the fraudulant practices that happen in the banks. If ASIC were serious they would take the banks on and report on that. The percentage of fraudulant activities is extremely minimal when taking into account the number of Brokers in the industry. We are an honest and ethical group and we all take pride in our job. ASIC's account of its "investigations" is nothing more than fluff designed to make them look as if they are doing their job. From where I stand they arent even doing half of their job and they are only going after the soft targets.

  • by Jerry Gibb 3/02/2014 2:35:54 PM


  • by Melbourne Broker 3/02/2014 3:21:02 PM

    Some good points GC - I would also like to see them targeting the banks.