ASIC’s failure to act on Sterling collapse led to ‘needless victims and losses’

Following inquires conducted into the Sterling Group late last year – which eventually collapsed in 2019, leaving more than 100 customers facing possible eviction and heavy financial losses – the report stated that the corporate regulator did not act quickly enough and “should have been more proactive”.

During the inquiries in November, ASIC chair Joseph Longo conceded that the regulator had received complaints about matters related to Sterling in late 2016, however it did not become officially involved until a referral by the Western Australia Department of Mines, Industry Regulation and Safety in March 2017.

“ASIC’s inaction and excuses are disconnected from the reality that it knew the target market of the Sterling scheme was vulnerable, elderly consumers,” senator Malcolm Roberts said in the report.

“This knowledge should have been sufficient for ASIC to respond aggressively to the very first reports of misconduct. By not doing so, more than 100 rent-for-life tenants lost $18.554 million upon Sterling's collapse in 2019, and now face eviction and homelessness.

“A concern raised about compensating these victims has been that it would amount to the government compensating a general investment loss. The unique circumstances and especially the failure of ASIC to act in a timely manner distinguish these victims from just being victims of a lost investment. ASIC had all the information and power to respond to the complaints. Had ASIC done so quickly, many millions would have certainly been saved. ASIC did not act quickly.”

Mr Roberts said that when considering all factors, including ASIC’s “regulatory negligence”, the government should “immediately compensate” the 130 victims for the full amount lost, plus interest and expenses.

Shortly after the inquiry in November, Mr Longo conceded that ASIC could have acted differently, but refused to apologise for the matter saying it would not be “emotionally inappropriate”.

Neil Griffiths

Neil is the Deputy Editor of the wealth titles, including ifa and InvestorDaily.

Neil is also the host of the ifa show podcast.