Can a regulator that restored a mismanaged property enterprise’s financial services license shortly before it went into administration be trusted to investigate its collapse competently, independently and thoroughly?
“Our investigations are ongoing and at this time are focused on ongoing winding up applications of further Scheme related entities, and obtaining funding from ASIC to perform examinations.” Tony Wright, Kate Barnett, Neil Cussen, Olvera Advisors.
Sadly for the tax paying public the answer is less important than the asking.
To allow doubt to form in the public’s mind about a regulator’s ability to fulfil its basic obligations is condemnation enough, and while it’s no secret that the statutory authorities charged with investigating breaches of the Corporations and Bankruptcy Acts are under-resourced the Australian Securities and Investments Commission (ASIC) wants the 1600 investors burned in the ISG Group collapse to have faith in its capacity to forensically examine the events leading up to the Group’s collapse in late 2024, events which include ASIC suspending the Group’s financial services license in July 2022 before restoring it in February 2023.
ASIC suspended the AFSL because ISG Financial Services Limited had failed to have professional indemnity insurance in place between 14 July 2020 and 21 June 2021 and because it had failed to meet statutory audit and financial reporting lodgement obligations for itself and the Schemes for which it was the responsible managing entity.
Once the insurance was topped up and the reporting obligations complied with ASIC lifted the suspension.
That gave ISG seven months to cajole more money out of punters who were no doubt reassured by the presence of an AFSL.
How reassured can they be now? And why should they think ASIC’s investigatory capability is superior to whichever section of the regulator decided it was appropriate to lift the suspension? That process reeks of tick and flick.
Prove you have PI. Lodge the outstandings. Pay the fees. Good to go. If only it was so straightforward funding the independent insolvency practitioners appointed to the ISG Group by the court on ASIC’s application.
For months they’ve been conducting investigations in parallel with ASIC. But there’s been no public examinations.
The most recent report from liquidators Tony Wright, Kate Barnett and Neil Cussen contains a line with which ISG creditors and investors must be familiar.
“Our investigations are ongoing and at this time are focused on ongoing winding up applications of further Scheme related entities, and obtaining funding from ASIC to perform examinations,” the Olvera Advisors trio said in a September 12 report to creditors of Noble Retirement Holdings Pty Ltd, one of 29 entities to which the three have been appointed since September 30 last year.
iNO’s mail is that the liquidators have abandoned efforts to obtain funding from ASIC and why would anyone be surprised.
ASIC does not want to fund private sector practitioners to undertake investigations over which it would prefer to exercise full control. There could be embarrassing lapses by ASIC staff awaiting exposure, and the regulator doesn’t want to look an even bigger chump by paying someone else to find them.
Like all enterprises that see themselves as too big to fail, ASIC catches and kills its own.
Nor do private practitioners want to be the ones uncovering explosive instances of apathy, incompetence or worse within the regulator upon which they rely for the untroubled continuance of their liquidator’s registrations.
Hello? Is there an unconflicted party present?
On one level the regulator is investigating itself and in the position to either advance or refuse funding to external parties to undertake parallel inquiries.
Those external parties however accept those monies fearful of the retribution that could be visited upon them if their findings harm their funder.
This unsatisfactory state of affairs is the status quo and maybe it’s as good as we can expect it to be.
The establishing of supposedly independent overseers never seem to produce in practice the outcomes anticipated in theory. Conflict is like many cancers. Manageable yes, curable no.
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