Tasmanian Times

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

The individual has always had to struggle to keep from being overwhelmed by the tribe. If you try it, you will be lonely often, and sometimes frightened. No price is too high for the privilege of owning yourself. ~ Friedrich Nietzsche

Economy

Royal Commission into banking, financial services: Why ASIC cannot do the job

In a previous article ( HERE ) I noted that Labor, the Greens and two-thirds of the public were calling for a royal commission to fix long-standing problems with banking and other financial services. The government agrees the problems are serious but insists that ASIC can do the job at less cost. But ASIC is a poor choice because its primary role is to enforce existing law – not preside over a public inquiry to see how well this law works.

Like other policing agencies its role is to investigate illegal actions and, where necessary, prosecute those responsible. This calls for a culture of confidentiality to gather evidence, protect witnesses and secure convictions. A royal commission, by contrast, is an open public inquiry to try to resolve a major social problem which has defied the efforts of policing and regulatory agencies. It aims at full disclosure so the public can understand the problem and have confidence it will be fixed.

This distinction is relevant despite the fact that ASIC’s charter also makes it responsible for regulating the marketplace – it must keep a watching brief on developments likely to harm consumers or treat them unfairly, and advise the government accordingly. This sounds fine until we learn that 57 major Australian banking scandals have been recorded in the past six years, suggesting this secondary role has been an abject failure.

There are, however, less obvious reasons why ASIC is not suited to the task, the most important being that it is not sufficiently independent. This is because it has agreed with the government not to publicly raise questions about the adequacy of present banking and insurance laws. Its duty is to advise the Minister but to do so confidentially, so he or she can decide what, if any, reforms are needed, and how best to pursue them.

There is nothing improper in this because the government has a right to ensure all agencies support its policies. Nevertheless, while there is no reason to doubt the independence and professionalism of ASIC in its investigative and policing roles, it cannot serve the broader aims of a royal commission – to inform the public of the nature and extent of the problem and consider the views of experts on how it might be resolved, including by better laws and perhaps harsher penalties.

In short, a royal commission will ensure wider public appreciation of the social cost of banking and insurance practices which, while harmful to some or many citizens, are a consequence of policies the government may see itself as ideologically committed to – such as a free enterprise philosophy based on caveat emptor (‘let the buyer beware’) which ignores the huge difference in knowledge, business sophistication and bargaining power between ordinary citizens and big banks and insurers.

One might, of course, anticipate a counter-argument that important issues of political philosophy, such as how to balance the benefits of a free market against values of fairness and respect for all citizens, are the responsibility of parliament, and should be resolved in accordance with democratic theory, that is, by a majority vote. Leaving the matter with ASIC is consistent with this view, because the government will have a majority in the House.

This is fine in theory, but it ignores the power of party leaders to determine outcomes. Because members of major parties are bound by doctrines of party unity, they rarely act on their own judgment. In practice they represent the interests of the party not the values of the community which elected them. Even on important questions of principle few will vote against a party line, as was evident in debates on the Iraq War, the apology and same-sex marriage.

Secondly, genuine debates in parliament on matters of principle and political philosophy are rare, in large part because the two-party system encourages a polarization in which parties divide on rigid ideological grounds, with neither willing to consider whether its core values might be reconciled with those championed by its adversary.

We should keep these matters in mind when told that ASIC is a suitable body to reform banking and financial services. But there is an even more compelling argument, based on an institutional bias set out in the Treasurer’s ‘Statement of expectations: April, 2014,’ which makes it clear ASIC has a responsibility to pursue a policy of de-regulation and reducing compliance costs so as to achieve budget savings of one billion dollars.

This document is complemented by ASIC’s ‘Statement of Intent’ of July 2014, which describes the relationship between itself and the Government in these terms:-

“ASIC welcomes the Government’s support for our independence. Equally, we respect the Government’s overarching responsibility for setting financial and corporate regulatory policy. We will continue to take the Government’s broad policy framework – including the deregulation agenda – into account as we work on achieving our strategic priorities.”

Anyone who reads these matching documents and their carefully nuanced language will see they spell out a ‘mission statement’ which ties ASIC not just to the government’s economic philosophy, but also to its current budget priorities. The aim is to serve coalition free market policies on banking and financial services, but without raising apprehension that the government will influence ASIC’s judgment of what constitutes unfair treatment of consumers.

There is a clear conflict here because if more effective regulation and supervision are necessary to counter an industry trend to exploit the naiveté, ignorance and trust of ordinary citizens, the budget priority to cut red tape and reduce compliance costs – which ASIC has in principle agreed to support – makes it a poor choice for a truly independent inquiry.

*Max Atkinson is a former teacher at the University of Tasmania Law School with interests in jurisprudence, political theory and moral philosophy.

• Ron-william Wijnhoven in Comments: … They move quite freely within the colour of law and then some, pushing legal boundaries against the little man while turning a blind eye to the fraudulent activities of the big end of town. But in my case, and I’m sure many others, they operate quite blatantly outside the laws of Natural Justice for their own chest beating and financial gains. They are a criminal corporation assigned by the Public system corporation to keep an eye on the criminal activities of the Bankster Corporations. What a travesty of justice for the Natural man who just wants to get ahead Lawfully, provide for his family and help his friends to do likewise without any unLawful interference by the big end of town, both sides of the Law.

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13 Comments

13 Comments

  1. William Boeder

    July 23, 2016 at 6:34 pm

    Ron William, also Allann Goone, followed by Simon Warriner and Pete Godfrey, each of you, are persons that are well acquainted with the the turgid goings-on by the below mentioned, as to how the ASIC authority and Australia’s Banks, go about their everyday business affairs and undertakings.

    I myself am still engaged in corresponding with ASIC via Mr Warren Day, Senior Executive Leader, Assessment and Intelligence.
    My reasons for doing so are to question how ASIC (as Australia’s Corporate Regulatory Authority) can feel comfortable with their former and quite possibly current incestuous relationship with the CBA Bank and quite possibly the remaining Big Banks here in Australia.

    The many in number allegations targeting the Commonwealth Bank, its upper level management and its executive board never seem to reach a point when any severity of censure or penalty is ever considered essential no matter the Millions of dollars of customer money gained by default.

    A current point of contention that I have is directed toward their ARIP loans (Asset Rich Income Poor) that are made available to small and medium Business people, then that the majority of these loans end in default due to the restrictions, the ease in which this Bank’s loan approval process allows for this Bank to over estimate the income of its borrowers, then that there are other questioning aspects that are contained in these given these loans.

    There are already precedent cases set that have been contested in the Courts across Australia (and Tasmania is no exception) where the Bank has been held to account and therefore attempted to settle a number of cases so that there are no convictions recorded against this particular Bank.

    One case lost to this Bank but not recorded as such was the means in which this Bank settled this particular contested matter.

    A decision was made by the Financial Services Ombudsman that had found that the Bank had been proven to have engaged in misleading a borrower, then that the borrower was awarded a specific $$ amount in light of this misleading action, only to see the Bank claim this awarded money to address this borrowers accrued fees and charges and to reduce but a portion of the debt owed to the Bank.

    I note that no mention or reference had been forthcoming from ASIC despite this type of loan being a loan outside the lending practices of Australia’s Banking Institutions.

    I do not have any whatsoever doubt to the claims of Ron-William:Wijnhoven, for that is the general activity that one (an individual) can expect from a Bank friendly ASIC regulatory authority.

    For the past 2 and a half years I have been following up all the Fairfax media articles that have published the dubious practices and engagements of this Bank, this includes the entire of the Special Senate Inquiry into the improper actions including the liaisons between both ASIC and the CBA Bank, then to the subsequent final report calling for a Royal Commission of Inquiry into the entirety of this Commonwealth Bank’s nefarious and malfeasant conducts and undertakings.

    The not so surprising end result here is that the Abbott government finance minister Senator Mathias Cormann declined the need for an RC of I, in that he claimed this Bank had already negotiated a compensatory scheme via its own volition to satisfy the Bank customers that were misled by the CBA Financial Advisory Division and all of its ills and errors that had been found to be fact.

    I now advise that this bogus claim of appropriate compensatory program has since been replaced by at least 2 others due to the unsatisfactory nature of the former compensatory scheme or program was was previously extolled by Senator Mathias Cormann.

    So much for the integrity of the Current Liberal party government in leadership in Australia.

    I have to hand the ASIC correspondences and media publications to verify or to give testimony to the full extent of the claims and or allegations as so stated within my comment.

    William Boeder.

  2. Ron-william:Wijnhoven

    July 22, 2016 at 8:40 pm

    Further to Leonard’s, comment (#11), I can state without any doubt that ASIC is not short of resources.They have more powers than the Federal Police and the Federal Gov will fund anything they want to Chase.
    No, their problem is that they, and the DPP are in so tight with the banks they choose to ignore what they know is going on.

    ASIC controls private companies and Public companies, but private companies are in direct opposition to Public companies; Capitalism V Socialism if you will.

    The other important consideration is that ASIC frequently conduct themselves in fraud, gaining financial and other advantages by deception, knowingly overpower the little man when they know he is innocent. They have no conscience and no morals. Then they gloat in the media as to how good they are.
    No my friend, I have first hand dealings with those criminals and they are wicked to the core. As the old adage goes, “Unchecked Power corrupts”. These are the people I spoke of above in #10, they are corporations (corp-“dead man” oration- “speaking) walking around void of human empathy, heart nor conscience.
    To give them more power and resources would only lead to greater corruption.
    A Royal Commission would be the best thing for the little man, free enterprise and the country.
    ASIC would not agree to a Royal Commission because they have a lot to hide. People would come out of the woodwork with truck loads of evidence that would wipe ASIC as a business.
    (Of course I hope people realise that ASIC is not a Public Service body…it is a totally separate corporation with its own ACN , ABN and makes profits and reports to their own Directors.)

  3. Leonard Colquhoun

    July 22, 2016 at 5:03 pm

    How about ASIC gets what is needed to do its job?

  4. Ron-william:Wijnhoven

    July 22, 2016 at 4:28 pm

    Hi TGC (#7),
    I comprehend your confusion; not many people realise that there are two Australia’s, two constitutions and everyone has two Identities.

    Quite a lot to cover in a blog, but still fact. It would be good for you to research these matters for yourself, so for now Perhaps i’ll just throw it out there for you !

    We have our Australian constitution of 1905 which applies to Natural Persons living on the land commonly known as Australia.
    We also have a constitution that was created after the second world war when OZ went bankrupt and formed a company known now as the Commonwealth of Australia P/L. It has its own ACN and ABN registered in the state of New York (USA) to trade in US bonds in which this company invested monies received from the exchange of Birth Certificates from the IMF for a sum of (in 1950’s) some AU $640,000.00. This corporation also has a Constitution but its jurisdiction only applies to Artificial Persons
    (Corporations, trusts etc).

    We also have two identities. We have a Lawful name and a Legal name. The Lawful name is the name your parents named you (christian name and Family name). The legal name is your Lawful name that was corporatised when your parents “applied for a legal name”, through the birth (or birthing ) certificate process. Your legal name is now corporatised, displayed in Capital letter and is now known as your first name and Surname.

    This legal / corporatised name is the only means by which the corporatised Australia ( all government agencies , banks, super funds etc), can engage in commerce with you.

    So yes, we have a beautiful country, filled with wonderful People (Natural Persons) who are guided by Natural Law, Common law, who are living people. We love, we cry, we feel, we have all the Human traits that corporate fictions are unable to do.

    There are some people, however, who believe themselves to be the corporate fiction, part of the big in-human machine where money and compliance to the rules, regulations and statutes of corporations resides as king. They are slaves where everything they do is governed by whether or not they sought permission first.

    Yes, a civil war will be eventual. between these … the Natural person who see themselves as Sovereign beings with all the rights and privileges of the Natural Person under the Rule of Law of Common Law going right back to the Magna Carta’s of the 1200’s…. versus the people who have taken up a position in the Corporatised world of the Commonwealth of Australia P?L, who are now, by their employment contracts, are contracted to become policy enforcers (police, military etc) of the State to enforce compliance with corporate rules and regulations (statutes). Scripture calls it when “brother will rise up against brother “.
    It will, however, be seen by the media and outsiders as a “Revolt” as expressed by Simon (#8) and the living People, revolting against the Corporation People, will be seen as terrorists; where in fact the corporate fiction IS the terrorist in this mess.
    We are seeing this very civil unrest occurring in the US at the moment.

  5. Simon Warriner

    July 22, 2016 at 2:53 pm

    Some links that might help with understanding the true nature of the problems caused by our current banking system:

    http://www.thetruthseeker.co.uk/?p=196

    http://www.moneyreformparty.org.uk/money/about_money/quotes.php

  6. Simon Warriner

    July 21, 2016 at 8:31 pm

    re 6, I think it would be more of a revolt than a civil war. Those doing the revolting would seem to outnumber the ones whose conduct has been both treasonous and revolting by several orders of magnitude.

  7. TGC

    July 21, 2016 at 7:07 pm

    #6 Not sure I understand this: “It is a real mess. We would have a civil war here in Australia if we knew what was really happening to our beautiful country” On the one hand “it’s a real mess” on the other “(it’s a) beautiful country” but there could be “a civil war”
    Which is it? or is it all three?

  8. Ron-william:Wijnhoven

    July 21, 2016 at 2:56 pm

    Hi Pete (#4) Thanks for your comments.The commonwealth Bank was a non-profit bank for the common wealth of all Australians, until Australia went bankrupt after the 2nd world War to get rid of our war debt. The Corporation that resulted was the Commonwealth of Australia P/L… registered on the New York Stock exchange and as a corporation, must comply with the corporation laws of the State of New York.
    The CBA bank was hijacked by some very stupid, but powerful Politicians,to come under the powers of the UN ( Sate of New York) and the IMF and World Bank.
    To clean up the Banks now would be impossible no matter how much our pollies rant and rave, because our banking system is now bound under Contract law to the rules, regulations and Constitutions of Corporations registered within the State of New York (USA).
    It is a real mess. We would have a civil war here in Australia if we knew what was really happening to our beautiful country.

  9. Allan Goone

    July 21, 2016 at 12:43 pm

    HI Max,

    Thank you for the frank article. ASIC really lacks the most basic elements required to protect consumers being a lack of (1) powers; and (2) basic will to act.

    ASIC are all words and it is no equivalent to a Royal Commission. ASIC claims it can and will change the culture of the large banks and financial services providers but this is clearly not the case. I mention just one case in this post which shows ASIC does not have the necessary will or power for changes.

    ASIC recently attempted to mislead the joint Parliamentary committee on corporations regarding the recent file note scandal at the Financial Ombudsman Service, recently exposed by the ABC (just google “financial ombudsman” and “file notes”). To summarise, a consumer had recordings of telephone conversations with FOS and when they compared these with notes provided by the FOS to the Supreme Court of Victoria, it shows FOS purposefully tried to make the consumer look bad and generate a different narrative. Real questions about why FOS kept false and misleading records and then tried to use them as evidence in the Supreme Court of Victoria arose and ABC exposed the whole thing a few months ago.

    The judge in a Court case mentioned decided that the file notes were not relevant to her decision (the case was concerned with an entirely separate matter anyway). However, the case was used by Mr. Kell (from ASIC) as an answer to a question of Senator Chris Ketter. However the judge herself states the following: “It follows from my conclusion that there is no basis for the court to look behind the November Jurisdictional Decision. Accordingly, I do not consider that the 22 October 2014 conversation (this is the one the subject of the file notes) is relevant to the determination of the issues in this proceeding.”

    Despite this clear statement that the Court was not concerned with the issue of the file notes, in the joint committee ASIC incorrectly stated that the the Court dealt with the issue. This just demonstrates a lack of will and really shows that ASIC simply make excuses to not act. As far as I am aware, ASIC have not corrected this mistake.

    ASIC also mentioned that they are not equipped to investigate FOS where there is misconduct. Is ASIC really in a position to to enforce the law and ensure the system of regulation is adequate if it cannot investigate FOS for the recent file note scandal? ASIC even answer a question put them by Senator Debrah of O’neil by stating that “the Ombudsman Service would need to investigate itself”. Has ASIC not heard of the adage that, “the stream shall not rise above the source”. FOS is supposed to be the little brother of ASIC, yet ASIC says it cannot put it in line? An organisation should police itself for misconduct?

    How can ASIC affect changes in the culture of these corporations if it cannot legally even affect change in the Financial Ombudsman Service (a body responsible for 30,000 complaints every years!), let alone the fact that ASIC appears to have no intention or will for such change.

    ASIC are no equivalent to a Royal Commission. ‪Max you should investigate this case I mention, thousands of Tasmanians are affected by FOS every year.

    #‎FOSfilegate‬ ‪#‎bankmates‬

  10. Pete Godfrey

    July 18, 2016 at 9:25 pm

    #1 Ron what a disgraceful way you were treated. It does appear that you must have got up the nose of some of the bigger lenders. They have sent their attack dog after you.
    I remember a few years back that the same big end of town convinced John Howard to get rid of all the small superannuation companies. I had my super with a lovely company in Queensland, they lent money for small local projects. They had never had a default on any of their loans, they supported their community and provided a great service.
    They too were targeted often by the powers that be, I think that was ASIC too. They were always found to be compliant but still every year they were audited. John Howard got rid of them in the end by bringing in laws that any super company had to have at least a Billion dollars in investors funds. Poor old Foresters ANA went out of business. The community is much poorer for that move by John Howard.
    An enquiry into the banks is going to be very difficult to bring about, after all they are major donors to the Liberal party.
    We should have followed the Icelandic people and let them go to the wall. We could have then just restarted the Commonwealth and State banks as government run entities that had ethical rules governing their behavior.

  11. Simon Warriner

    July 18, 2016 at 8:47 pm

    re 2

    Or, indeed, why ASIC is not up to its job regulating anything much.

    Still, we will never know because while ever commercial enterprises are able to donate in secret to the political parties that form government there remains a conduit for the sort of corruption that delivers neutered watchdogs.

  12. TGC

    July 18, 2016 at 4:51 pm

    There is an urgent need for a Royal Commission into why ASIC is not up to the job of regulating banks- in other words sending them ‘broke’ by moving their profits across to the depositors.

  13. Ron-william:Wijnhoven

    July 18, 2016 at 2:35 pm

    Hi Max, great article. I was excited to hear about the calling for a Royal Commission into ASIC’s activities.Your article speaks of ASIC’s inability to keep the big end of town at bay, but I want to raise the other side of why we need a Royal Commission in their practices, which are mostly outside the Law.
    I was a Director of a small financial business, a family business. I spent a number of years with major lender as a loan consultant, “saving” people from the Major Banks. I was always in the top ten consultants in the country; I loved helping people financially and enjoyed teaching people how to pay off their home loans much sooner and expose the Bankers (banksters) tricks that enslave the average mums and dads.
    So I started my own business. I had over one thousand faithful clients and had trained six other consultants in providing funding options to clients, also strongly stipulating adherence to the Uniform Credit Code.

    As a side interest, I purchased some other businesses which had liquidity problems, fixed them up and create cash-flow positive income streams for myself, my children and my investors and provide employment opportunities within the community.
    I was also offering a very nice interest rate to some of my clients if they wanted to invest in my business (about 3-6 basis points above the cash rate at the time)as I acquired these businesses. Mostly, my clients in the investment programme, offset their interest payments against their home loans, greatly reducing their monthly commitments or reducing the terms of their loans.All of my clients were enjoying the programme.
    That was until ASIC’s knocked on my front door in October of 2003.
    They were flying their colours of friendship to “just check on what we as a company were doing” with our investment (debenture) programme. Everything I was doing was within ASIC’s regulations and guidelines according to my accountant and one of the communities biggest Law firms, as they established my debenture programme. Everything was compliant. ASIC had initially sent letters stating that they had no interest in my Home Loan business.
    But I found out later, ASIC’s existence was being questioned by Government at the time and they were looking for some easy targets to take down to justify their existence.
    Then one day before Christmas, 2003, ASIC investigators came alongside, having lowered their friendly colours and now had raised the skull and crossbones, began a series of horrendous events that led to 1.2 million of investor monies being lost, systematically destroying all my eight businesses, stole four properties, stole monthly trailer monies (still to this day), destroyed my family, and spending over two hundred and fifty thousand dollars in legal fees, and after 5 years of allegations and counters allegations and without one single day in court, i finally had my time in court, but no less than eight different legal firms later, I was left with the amazing services and effort of legal aid.
    As it worked out, the sixty two investment charges were dropped and now, ASIC investigators being quite red-faced, turned to my home loans business to save face.
    ASIC’s investigators drafted a series of false statements and coerced my home loan clients to sign, offering their money back if they signed. I was sent emails by two of my investors stating that ASIC investigators would not leave their home until they signed these statements. These false statements drafted by ASIC, eventually sent me to be incarcerated for 12 months, banning me as a director and banning me from offering securities which had nothing to do with the home loan matter.
    We appealed on the basis that the evidence didn’t match the verdict as well as other points of Law, but my now different “legal aid wiz” had no idea about my matter.
    Last year (20015), I applied for a position again with my past lending employer. I disclosed all that happened to me and they wanted to rehire me but when they made contact with ASIC, they were advised by ASIC that I was banned as a loans consultant which is completely untrue and a lie.
    ASIC has more powers than the Federal Police.
    They move quite freely within the colour of law and then some, pushing legal boundaries against the little man while turning a blind eye to the fraudulent activities of the big end of town.

    But in my case, and i’m sure many others, they operate quite blatantly outside the laws of Natural Justice for their own chest beating and financial gains.

    They are a criminal corporation assigned by the Public system corporation to keep an eye on the criminal activities of the Bankster Corporations.
    What a travesty of justice for the Natural man who just wants to get ahead Lawfully, provide for his family and help his friends to do likewise without any unLawful interference by the big end of town, both sides of the Law.

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