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The Australian 12:00am April 19, 2017
Over nearly a decade, the corporate regulator regularly bowed to demands from big banks and financial players — NAB, CBA, Westpac, Macquarie and AMP — to water down the language used in press releases dealing with industry wrongdoing.
A trove of Australian Securities & Investments Commission documents, obtained by The Australian after a two-year Freedom of Information battle, shows the intense pressure put on the regulator by battalions of lawyers, executives and spin doctors in the service of banks and financial services companies.
At stake was the wording of press releases relating to some of the biggest scandals to rock the sector in recent years, including shoddy financial planning that hurt the retirement savings of up to 560,000 CBA and Macquarie customers and sparked calls for a royal commission into the sector.
The emails, meeting notes and other documents, dating from 2006 to 2015, show some in ASIC fought back.
“I don’t believe the media release should be up for negotiation,” one media manager told his superiors in 2014.
However, they also show that sometimes the regulator pre-emptively folded, diluting statements even without contacting the banks.
ASIC’s deputy chairman, Peter Kell, who led the regulator’s efforts to stem the financial planning scandal and is regarded as a chance to become chairman when Greg Medcraft’s term ends at the end of this year, is a frequent presence in the more recent documents.
The regulator declined to make Mr Kell available for an interview.
While an ASIC spokesman portrayed the documents as relating to obsolete processes of “up to five years ago”, the most recent press release dealt with in the trove is from February 2015 — just two years ago.
“Now, apart from criminal matters, any group against whom we have taken enforcement action should have 24 hours to check our releases before they are issued, but only to ensure factual material is accurate,” the spokesman said.
The documents appear to show that the CBA’s chief lawyer, David Cohen, was closely involved in drafting a 2014 press release about fresh licence conditions slapped on the bank’s financial planning arm.
ASIC’s action came at a low point in relations between CBA and the regulator, with ASIC furious it had inadvertently misled parliament on compensation provided to the bank’s financial planning victims.
Nonetheless, Mr Cohen, appears to have been consulted during the regulator’s drafting process.
After consulting with Mr Cohen, senior ASIC executive Greg Kirk cautioned against language in a draft release that slammed the bank for giving the regulator wrong information.
“Having just spoken to David Cohen and got some information on what they did advise us in the past, we will have to think carefully about what we can say,” Mr Kirk said in a May 14 email.
One in a series of draft releases bears the handwritten heading “Version 15 D Cohen” and the date May 15, 2014 — the day before the press release was issued.
A CBA spokeswoman declined to answer detailed questions.
“ASIC plays a crucial role in ensuring Australia has a strong and stable financial system, and fact-checking statements prior to announcements is an important part of a regulatory process,” the CBA spokeswoman said.
Mr Cohen is also a presence in the earliest set of documents obtained, which relate to a press release issued in 2006 about AMP, where he was general counsel at the time.
An ASIC probe found AMP recommended its own products to financial planning clients 93 per cent of the time. AMP initially refused to enter an enforceable undertaking, but as ASIC geared up for a full-scale investigation it relented and established a compensation program.
Mr Cohen sent ASIC a two-page list of “issues we have with ASIC’s draft media release”, together with a redrafted press release for the regulator’s consideration.
ASIC accepted many of Mr Cohen’s changes, including deleting a mention of the lucrative trailing commissions reaped by financial planners and getting rid of a phrase suggesting compensation for “deleterious financial advice” that Mr Cohen said was “not helpful”.
AMP declined to comment.
In another case in 2014, as ASIC worked on a press release about losses caused to customers who used NAB’s Navigator investment platform, a worker in the regulator’s media unit wryly emailed colleagues: “This is one of those releases that has been drafted by everyone other than ASIC ha!”
A NAB spokesman declined to comment.
Also in 2014, ASIC negotiated with Westpac over the wording of a press release dealing with a $4m Ponzi scheme operated by a former home finance manager at the bank, David St Pierre.
Westpac reported St Pierre, who was jailed for fraud in February, to ASIC. “I am OK with this version if it has been structured in a certain way to placate Westpac, however, I have also attached an alternate version which I think focuses more on the payment and gets to the point a bit faster,” a media officer told colleagues in a September 29, 2014, email.
A Westpac spokesman said ASIC consulted with the bank “for factual accuracy”.
In February 2015, ASIC also accepted changes to a press release about Macquarie Group suggested by the company’s head of financial services, Greg Ward.
A Macquarie spokeswoman declined to comment.
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