The head of the corporate regulator has sent a chilling warning that Australia has become a “paradise” for white-collar criminals due to a lacklustre penalty regime for offences.
Chairman of the Australian Securities and Investment Commission, Greg Medcraft, delivered the message in a speech for the Walkley Foundation this week. According to Fairfax reports, Mr Medcraft used the speech to push for harsher jail terms and heftier penalties in addition to calling for a national testing regime for financial advisers.
“You have to lift the fear and suppress the greed,” he said. “The thing that scares white-collar criminals is going to jail and that’s what scares them everywhere in the world.”
“The penalties, particularly civil penalties in Australia for white-collar offences are basically not strong enough, not tough enough. All you’re doing is giving them a slap on the wrist and that is not deterring people.”
ASIC has copped criticism for its handling of a range of scandals including the uproar most recently over the Commonwealth Bank’s financial planning arm in which reckless advice was given to investors in return for commissions.
A Senate inquiry into the scandal this year found evidence pointing to fraud and a cover-up at the bank. Some members of the inquiry like Nationals Senator John Williams have called for a royal commission into white collar-crime on grounds it has become systemic.
In his address this week, Mr Medcraft conceded ASIC had made mistakes in the past but argued its capacity to take swift and decisive action was impeded by a lack of resources. However, he provided an assurance the corporate regulator would not be captured by the “big end of town”
He said more pressure would be placed on the financial advisory sector to improve its performance and flush-out those doing the wrong thing.
“One way of lifting resources is to put pressure on them to better police themselves,” he said.
“You have to try to put more pressure on the people who are supposed to be monitoring the advisers, so our strategy is going to be spending a lot more time putting pressure on their own misconduct and breach reporting.”
He also repeated calls for financial planners to sit competency exams just as pilots have to meet tests administered by the Civil Aviation Safety Authority. “I regard financial advice as just as important,” he said.
