The senate inquiry into ASIC’s performance last week heard these recommendations put forward by a number of parties in regards to the handling of the investigation into the Commonwealth Bank of Australia’s wealth management arm.
ASIC accepted an enforceable undertaking into Commonwealth Financial Planning (CFPL) in 2011 due to revelations by a group of whistle-blowers that widespread unethical behaviour existed within the workplace.
Subsequently, and after a lengthy investigation, ASIC banned seven financial advisers and secured $51 million of compensation for over 1,100 affected customers. Another former CFPL adviser has also just been banned last week.
But one of the key whistleblowers, former CFPL planner Jeff Morris, told the inquiry that he no longer works in financial services due to the stress caused by his decision to blow the lid on the workings of the workplace.
He knew at the time that the protection for whistleblowers wasn’t going to be sufficient to allow him to exit the investigation unscathed, but he did it anyway – a decision that chair Senator Mark Bishop called “courageous”.
“I do not think at the outset we seriously expected ASIC to protect us. If you look at their whistleblower protections, there are a lot of weasel words in there and it is very, very limited,” Morris said. “I suspect if a company wants to get rid of a whistleblower, they never do it because you are whistle-blower.”
ASIC has since improved and reformed its whistleblower guidelines to better manage the information it receives and the protection of the person it receives it from.
But Morris said the most important way to help and encourage whistleblowers is some form of financial compensation.
This would provide more incentive for potential whistleblowers to come forward, and subsequently allow them to move on with their lives.
“I would suspect you would find the institutions would have to improve their behaviour overnight if literally any employee could bring them down when they were doing the wrong thing with some sort of incentive - not necessarily a huge incentive - like in the United States - but some reasonable basis to allow people to move on with their lives, “ he said.
A number of experts who spoke at the inquiry also agreed that whistleblower financial compensation needs to be considered.
One, Dr Peter Bowden, said it’s absolutely vital that this issue is dealt with now.
“This is the most important committee meeting that I have ever attended and that you have ever chaired. If we get this right, we will save this country millions and millions of dollars,” he said. “We are behind the rest of the world…and it is a shame that we are. As I said, I am looking for this committee to change it and bring us into the 20th century - not the 21st century, just the 20th century.”
Bowden urged the inquiry to look at introducing financial incentives for whistleblowers in the form of a false claims act, which he said is the most effective version of whistleblowing legislation, with savings in the millions.
Exposing wrongdoing is a higher ethical demand and priority than any other an employee would face, he said. As whistleblowing mostly results in the death the informant’s career, there needs to be some kind of motivation for them to come forward.
Aside from this, the benefits that come from learning about dodgy practice within a business early on provide a huge return on investments, one that can save millions Bowden said.
The experts, which included Dr Vivienne Brand and Dr Sulette Lombard of Flinders University, and Professor AJ Brown from Griffith University, also agreed that the inquiry should mandate an internal whistleblowing system.
“…something like saying the directors' annual report needs to refer to whether there is an internal whistleblowing system and whether there was ever an occasion in a given 12-month period where the timelines for response were not met, or where the matter was referred externally because the whistleblower was not happy with the response they got, which is the public interest disclosure model. We think even a little thing like that could make a big difference,” said Brand.
Whistleblowers should be offered financial incentives to encourage them to come forward and cover the losses spurred from the backlash of their revelations.