ASIC accused of unfairly banning advisers to meet KPIs

ifa reported last month that a former client of Protect Ensure reached out to the Financial Omudsman Service in an effort to recover the $70,000 he says was stolen from him under ASIC’s watch.

Greg Wenmoth said he and his wife lost a large portion of their nest egg after they invested into a dodgy venture run by Protect Ensure’s director, Lee Robin.

After permanently banning Mr Robin from the industry, ASIC decided it would also ban former Protect Ensure adviser Keira Keegan for three years.

But sources close to the debacle, who spoke to ifa on the condition of anonymity, say the ban on Ms Kiera was unfair, as she was unaware of her boss’ misconduct.

They say it was apparent during the process that the regulator was not interested in whether she was innocent or not.

ASIC was only after one thing: a banning order, they say.

“This has destroyed [Keira’s] life. This has destroyed her career, her income and was a major player in the breakdown of her marriage. It’s destroyed everything,” one source said.

“ASIC’s action has had absolutely no measure of affect to protect the public.”

Hungry for bans

In December 2016, ASIC said it found that Ms Keegan had recommended clients Mr Robin’s dodgy investments, and made representations that they were a conservative and low risk option.

But documents show that Ms Keegan had long stood her ground against the regulator, maintaining that she never offered personal advice around these products, received no financial benefit and was unaware of her employer’s misconduct.

Still, those close to her say this was not good enough for ASIC, which during one hearing seemed desperate to incriminate her.

“There were several statements put to her that were incorrect. There were statements that say Keegan was the one to organise the transfer, Keegan assisted with a property purchase when she wasn’t even working at the firm at that time,” a source said.

“She wasn’t given the opportunity to speak. In a recording, you can hear her say several times that they are not letting her answer the question.

“Procedural fairness was non-existent.”

There were six grounds brought against Ms Keegan, but ASIC was only able to successfully ban her on one: misleading and deceptive conduct. The regulator’s claim that she was not of good fame or character, for instance, had failed.

Ms Keegan was later successful in a stay application of the ban with the AAT. But when ASIC moved to relist the hearing to an expensive four-day trial, Ms Keegan was forced to forfeit.

“The intent was obvious: to carry out a financial warfare on Keira so she could not see the end trial which would deal with the matters on why she was banned,” a source said.

“She’s lost her entire life over something with no malicious intent. How does that protect the public?”

The regulator’s priorities

According to Mr Wenmoth’s submission to FOS, ASIC had known there were issues at Protect Ensure since 2012, but failed to take any action to protect clients.

Because of this, many sources believe ASIC’s priorities are not to look after the public, but to meet banning targets.

“ASIC had no interest in protecting me, my funds or my family. They were only interested in going after the advisers,” one source says.

The AAT recently reviewed the banning order of a former NAB financial adviser.

In its judgement, the AAT said while Gerard McCormack had indeed breached the Corporations Act, a banning order should not have been made as it would not have served to protect the public or deter like conduct.

“No person suffered any financial detriment and therefore no loss or damages claim could arise. Mr McCormack accepted that his conduct in attempting to recover his client’s money for him was wrongful and an aberration on his part,” the judgement stated.

“The only purpose a banning order could serve in these circumstances is to penalise Mr McCormack. That, by itself, is plainly an inappropriate purpose.”

ASIC has since appealed the AAT's decision.  

This story is part of a widespread investigative feature on ASIC enforcement activity to be published in the March edition of ifa magazine.