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BFCSA: Senate Inquiry in 2014 found that ASIC was a weak and hesitant regulator. Throwing money at ASIC is a waste.

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'Investing in a proven failure': whistleblower Jeff Morris sceptical of ASIC changes

Updated 20 Apr 2016, 1:12pm'investing-in-a-proven-failure':-whistleblower/7342124

Eleanor Hall

Source: The World Today | Duration: 6min 9sec

Someone who's long had concerns about ASIC's power and effectiveness is Jeff Morris. He's the whistle-blower who tipped ASIC off to wrongdoing and cover-up within the Commonwealth Bank's financial planning arm. But it took ASIC more than a year to act on his information.

ELEANOR HALL: Well, we have one of those whistleblowers with us here in the studio, someone who's long had concerns about ASIC's (Australian Securities and Investments Commission) power and effectiveness: Jeff Morris. He's the whistleblower who tipped ASIC off to wrongdoing and cover-up within the Commonwealth Bank's financial planning arm. But it did take more than a year for ASIC to act on his information. And Jeff Morris, thanks so much for joining us.

JEFF MORRIS: Thank you.

ELEANOR HALL: Now the Government's response today to its review into the corporate regulator addresses several of the issues that you raised in your evidence at that inquiry. Do you agree with the Prime Minister and the Treasurer that these extra powers and resources for ASIC make a royal commission now unnecessary?

JEFF MORRIS: Absolutely not. I think my personal experience with ASIC - and I have had experience of dealing with ASIC as a whistleblower at the coal face, which Mr Turnbull and Mr Morrison, with all due respect, have not had - and I found trying to get ASIC to act way back in 2008 was like flogging a dead horse.  And ultimately I had to go to the media, and then there was a Senate inquiry, which in 2014 found that ASIC was a weak and hesitant regulator. "Timid and hesitant regulator" were the words they used, and you don't fix a culture like that by throwing money at it.  I think to increase ASIC's funding is really just investing in a proven failure, and the contrast with a royal commission is, a royal commission actually has at its command as we've seen with the Royal Commission into Child Abuse, the most powerful weapon in anybody's armoury and that is it exposes the truth.  And the truth is a huge equaliser here. We've had tens of thousands of victims. And the truth is the equalizer between them and the powerful institutions.

ELEANOR HALL: As you say though, there have been several inquiries including a senate inquiry. What could a royal commission achieve, further to those that a stronger ASIC just working on the results of those enquiries, can't?

JEFF MORRIS: Well, for a start, you're asking ASIC to essentially investigate the past failures of ASIC and they're not really very interested in pursuing that topic.  The Senate inquiry that I referred to had a record number of submissions - over 500 submissions - and a Senate inquiry simply doesn't have the time or the resources to look at those sort of submissions. It only actually looked at very few of them.  So there is a vast number of submissions there that haven't really been looked at for feedback on ASIC's performance, but I think the thing is, people are opposing this royal commission - what are they afraid of?  I mean, we're being told that it'll shake confidence in the banking sector. Well, to me that suggests there's something that really, the people ought to know about and I believe that people can handle the truth and they're entitled to know.

ELEANOR HALL: There is the argument too though that it's a waste of time and money?

JEFF MORRIS: Oh, absolutely not. I mean, let's look what's happened with, as I say, the child abuse royal commission. That has brought the matter into the public consciousness, more and more people come forward as a result of the public hearings and you get this cascading effect of truth in the public domain.  Now that will shape our responses to child abuse for generations to come.

ELEANOR HALL: Now you say that this is about throwing money at an institution which is a proven failure but let's look at some of the specifics because the Treasurer says he is trying to put in place a "serious action plan".  There'll be $61 million for technical surveillance to make ASIC more proactive rather than reactive. Is technical failure one of the problems that you identified?

JEFF MORRIS: Well, absolutely, and of course, it's all very well giving ASIC new superpowers, but the problem with ASIC has never been the powers that it has. The problem has been that it doesn't have the will to use the powers that it already has.  So I don't think adding bells and whistles or more powers to ASIC or more funding for ASIC is really going to achieve anything more than more of the same, more of these scandals year after year.

ELEANOR HALL: What about the new commissioner though with a focus on prosecutions in the banking sector and real expertise in that area?

JEFF MORRIS: Well, I guess you would say that they should have had that a long time ago but the fact is what's going to change? I mean you put this back in the lap of ASIC. I mean, they've had a long time to deal with these scandals. They've had plenty of warning over the CBA matter.  When that first went to the Senate in 2013 ASIC's response initially was we've done a great job here.  They didn't even realise how bad they were and that was exposed in that inquiry in the findings.

ELEANOR HALL: So what do you, I mean you've obviously paid a huge price for being a whistleblower, what do you think needs to happen to change this culture?

JEFF MORRIS: Well, well there's a culture at ASIC I think of complacency, and they simply... they used to believe everything they were told by the big institutions and I think to a certain extent they, there is still too cosy a relationship there.  I think a royal commissioner comes in without fear or favour and that's where we see the very best of the legal system, where it's the top former judge or QC actually inquiring into the truth - not an adversarial process in a court.  And I think that's very important, and at the end of the day, why should we be afraid of getting to the truth.

ELEANOR HALL: Now the banks are going to be levied to raise extra funds for the corporate watchdog. Do you support the idea of a levy?

JEFF MORRIS: Well, look I think that's, it strikes me as a bit of gimmick to be frank because if the customers don't pay that then the shareholders of the bank do.  And I think in all fairness I think the shareholders have suffered for the mistakes and the cover-ups of management and the boards of these banks so if you were saying to me let's take it out of the executive salaries and the director's fees, I'd be supportive of that.

ELEANOR HALL: The Treasurer did say today he would be "furious" if the banks passed on this levy to customers. As you say, you've worked inside the big banks. Do you think the managers would be looking to pass it on or would they think that they could take it out of their rather large profits?

JEFF MORRIS: Well, look, I just don't know how you ever keep track of that. I mean, the banks have been pulling the wool over ASIC's eyes for a very long time and I'm sure they won't have any difficulty in slipping that in somewhere or other.

ELEANOR HALL: Well, look, Jeff Morris, thanks so much for giving us the benefit of your experience in this industry.


JEFF MORRIS: My pleasure.

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