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ASIC’s call for tougher financial services licensing too late for Storm Financial victims

There is an age old saying “all press is good press”. However, given the recent torrent of bad press regarding the behaviour of several leading financial service providers, it seems unlikely the financial planning sector would agree.

On the other hand, leading class action firm, Levitt Robinson, has welcomed the attention as it has placed renewed pressure on both the financial planning sector and it’s regulators to review their practices and regulations in light of protecting consumers.

This week, at a financial systems inquiry chaired by former CBA chair David Murray, the Australian Securities and Investment Commission called for an extension of their powers in relation to product intervention, the right to deny financial licence applications and the ability to prosecute managers for failing to supervise their employees.

Chairman of ASIC, Greg Medcraft has stated that there are a number of reforms that ASIC may need to consider if they are to better their practices and their effectiveness in monitoring financial planners, changing reporting regulations and licensing frameworks being amongst those reforms.

Bell Potter co-founder Lewis Bell, has stated that many of the sector’s flaws start with the fact that ASIC is the gatekeeper in providing licences to financial service providers, and in the past have been far too liberal and ready in their approach.

“ASIC is the primary gatekeeper in providing licences to financial services providers, and I think that the licensing system is flawed. Many of the organisations, like Storm, that have been found guilty of misconduct should not have been licensed in the first place” Mr Bell was quoted as saying in submissions to ASIC.

According to Levitt Robinson Solicitors joint Class Action Division Director, Stephanie Carmichael, Mr Bell’s comments go right to the heart of the issue.

For years we have pursued claims on behalf of aggrieved Storm investors against the banks, however, had ASIC intervened sooner, or reviewed their quality control sooner, mum and dad investors may have been saved from the trouble in the first instance,” Ms Carmichael said.

Levitt Robinson Solicitors is currently pursuing an action against ASIC in relation to their involvement with the Storm Financial collapse.

“While it unfortunately may be too little, too late for Storm investors, perhaps a little bit of foresight may go a long way in protecting future investors,” Ms Carmichael said.