ASIC fronts Senate Economics Committee

ASIC has lost touch with the all-important wealth management arms of Australia's major banks and financial institutions management businesses, if an appearance before the Senate Economics Legislation Committee yesterday is any guide.

The appearance by ASIC Chairman, Greg Medcraft, deputy chairman Peter Kell and commissioners Cathie Armour, John Price and Greg Tanzer in front of the committee yesterday was full of revelations - many in regard to the spate of wealth management scandals featuring the major banks and other large financial players such as Macquarie and AMP.

This time the focus moved from the Commonwealth Bank and Macquarie to the National Australia Bank which has recently fessed up to dismissing almost 40 financial planners for poor compliance.

Medcraft began with a prepared speech before explaining that ASIC had started gathering information from NAB on the dismissals of 37 staff over the past five years. This included a call from the bank's CEO Andrew Thorburn confirming NAB  would provide whatever assistance necessary.

Medcraft also noted that ASIC had been expressing concern with the poor culture and compliance in the wealth management sector - calling it a "high risk" business - and that there had been concerns at ASIC and elsewhere "for some time".

Among the revelations were reports that conflicts of interest were routinely overlooked. More concerning was the admission that ASIC remained unable to check the whereabouts and actions of the 37 advisers moved out of NAB for poor conduct. ASIC is still waiting for NAB to provide the names of all the planners, and the exact reasons for dismissal - requested under ASIC's compulsion powers.

Once it had the names it would seek to reconcile them against any breach notices filed by NAB, and check if the advisors were still working in the industry.

The "matters raised on the weekend" - that is, the allegations that NAB financial advisers had lost clients' funds through slef-intersted advice - were apparently not raised with ASIC, which seems to have been caught on the hop by media reports. The executives told the committee they had no record of any whistleblower coming forward in relation to the matter ahead of the most recent set of allegations regarding NAB's financial planning business.

They said they had no way to estimate how many victims there might be from the NAB financial planning scandal.