The Elephant in the Room: The scourge of white collar - Delphi Centre

The Elephant in the Room: The scourge of white collar - Delphi Centre

The Elephant in the Room: The scourge of white collar crime Naomi Halpern, Victorian lead senate candidate, Nick Xenophon Team I recall, as a child, ...

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The Elephant in the Room: The scourge of white collar crime Naomi Halpern, Victorian lead senate candidate, Nick Xenophon Team

I recall, as a child, accompanying my mother to the bank with its polished wooden floors. I remember the bank manager greeting her by name, “Good morning Mrs. Halpern, how are you?” with a benign smile in my direction. The atmosphere was formal and polite. There was an almost reverent respect for the bank and to the customers who came through the doors. It is tempting to drift into nostalgia. The banks in the 1960’s may not have been worthy of the respect they enjoyed. I was only a child with no awareness of the seedy underbelly of financial services that I would discover as an adult. Fast forward a few decades where, almost on a daily basis, one banking scandal after another unfolds. The plots and characters revealed are like a Hollywood film. Except it is not a movie. It is happening here and now, in Australia, with frightening regularity. Publicised scandals include ANZ, Macquarie Bank, Westpac’s wealth arm BT Financial, NAB and CBA, Australia’s self-proclaimed most “ethical” bank. CBA is the current star of the show. CBA is still trying to recover its credibility after the scandal involving its financial planning division that lasted a decade. Its compensation scheme, launched in 2014, has received more than 9000 requests for reviews. To date, it has made 171 ‘offers’, making payments of a paltry $2 million in compensation for “shoddy” advice. Recently, our most ethical bank revealed that 1 in 10 files of those customers are missing. Sorry, gone, cannot find them. Let’s be clear, one thousand files are missing. Just when our most ethical bank tells us it’s safe to get back into the water, out of the murky depths, explodes a new scandal where CBA staff are implicated in an alleged $76 million dollar fraud: a Ponzi scheme, replete with secret commissions and ignored by the bank’s management for five years. Happening here in Melbourne and impacting customers across Victoria. Hot on the heels of this scandal, CommInsure, the insurance arm of CBA has been exposed by a joint 4 Corners and Fairfax media investigation led by Golden Walkley award winning journalist, Adele Ferguson. Dr Benjamin Koh blew the whistle on extraordinary practices, including asking doctors to change their diagnosis, missing files and appalling stories of claimants

in their most desperate hour of need being denied insurance payouts based on outdated diagnostic criteria. Late last Friday, the senate report into Forestry Managed Investments Schemes was published. In a thorough examination of how the ‘train wreck’ unfolded it was revealed how successive governments, the ATO, ASIC, banks, product issuers and commission driven sales, all had their part to play. Chairman of ASIC, Greg Medcraft, told a senate inquiry last year that Australia is a “paradise for white collar crime”. We are lucky to have a corporate regulator whose role is to protect the public from corruption that causes cataclysmic impacts on the lives of hard working Australians who trust banks and financial planners to do the right thing, to act in their best interests. Sorry to alarm you but there are no knights in shining armour to charge in on white horses and slay the beast of corruption in our financial institutions and among its members. After 17 months of repeated, and increasingly, desperate urging by Jeff Morris, the ex-CBA employee turned whistleblower, ASIC finally acted on the financial planning scandal. Rather than going in and seizing files, ASIC made a request for files, bizarrely accepting that many files had been lost and giving the bank time to “discover” these at its leisure. A severe disconnect exists between identifying the problem and meaningful action which requires adequate resources as well as competency and willingness. Last year the Scrutiny of Financial Advice Inquiry heard banks admit they do not always make breach reports about dishonest and unscrupulous employees. There is apparently some grey area where it is not clear how wrong a behaviour has to be to warrant action. This raises a question mark around ASIC’s much lauded financial adviser register. If banks are not reporting advisers how can we be sure the information on the register is accurate? The danger is the possibility of a white elephant lulling us in to a false sense of security while the proverbial elephant in the room goes unnoticed or not spoken about. The public expects the regulator to act on reports of white collar crime. Yet ASIC has told victims that even if it investigates it may not be ‘commercially viable’ to prosecute. Victims have been advised to “let it go and move on” with their lives. Frequently sanitised as ‘poor’ or ‘inappropriate’ or ‘misleading’ financial advice, these terms are akin to describing a victim of brutal rape as

having been inappropriately touched, or of family violence as having had an unfortunate tiff. To date, NAB is the only bank to initiate dialogue with me and other victims of unconscionable and predatory advice, inviting participation in discussing experiences in the training of senior leaders. We have a system that plays off commercial viability against ethical necessity. It is imperative we change a culture which enables white collar crime to flourish. The Coalition government launched a Royal Commission into union corruption but resists repeated calls for one into the banking and financial services industry. On Tuesday, Nick, along with Senators Peter WhishWilson and John Williams joined voices to call for a Royal Commission across the financial services sector with Bill Heffernan acknowledging this is likely the way things are heading. 16/3/2016

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