Lessons Learned From An ASIC Review

Mar 21 2016

 Leassons Learned From An ASIC Review - It Can Happen To You

Paul Walshe, NCPA board member and Chairman has published this article to help assist all SACC lenders understand what occurs under an ASIC review and how you can avoid some of the issues ASIC investigated.

Source : Lessons learned from an ASIC review

Published in - Mortgage Business

Monday, 21 March 2016   |   Paul Walshe

 ASIC recently conducted a review into my company’s flexi-loan product which provided me with some valuable lessons about dealing with the corporate regulator.

I’ve built Fair Go Finance from the ground up since 2008 and we pride ourselves on being a responsible lender, committed to giving our customers access to a brighter financial future. To see our culture called into question was hard to swallow for my staff and I.

While we were disappointed with ASIC’s media statement, I’m not going to have a go at the umpire. We respect their role in enforcing trust and transparency in the financial sector.

Our negotiation strategy was pretty straightforward – we viewed this as part of a long-term relationship with ASIC, and our objectives were to adapt where needed and to minimise any impact on our reputation and finances.

Having gone through this review, I believe the lessons I learned may give others an insight into working with ASIC.

Lesson #1: ASIC’s perception is (almost) reality

In looking for systemic issues – and with a track record of success in an area – ASIC is likely to look at other businesses they perceive to be similar.

In our case, there were other lenders in the same industry who had previously offered similar products, but with different obligations to the customer.

These variations are lost on a budget and resource-stretched ASIC who views industries in broad terms.

Lesson #2: The path of least resistance is still not easy

ASIC’s review of Fair Go Finance started in March 2015 and was resolved in January 2016. To get to this resolution, there were notices, meetings, responses to notices, letters, data extracts, paper files, training manuals, procedure documents, review periods, further notices, further requests and clarifications.

In a relatively small organisation of 30 staff that is trying to meet customer expectations plus stay on top of other compliance matters, the interruption this process delivered to the business, as well as the impact on staff morale, is not to be underestimated.

Lesson #3: When talking French, it helps if you are from France

Good advice is important and it pays to have someone on your side to help steer you through unchartered terrain. We had a former ASIC staff member on the team and this helped us understand ASIC’s position and concerns, and the options that were available.

Lesson #4: ASIC does listen

It's often said about negotiations that if both parties are unhappy (but can live with it), a fair outcome is likely to have been reached. ASIC acknowledged the efforts we undertook to comply with their requests, and the costs that were borne by the business in doing this quickly. In doing so, we reached an outcome that was in line with our objectives.

What to do if ASIC takes action

What should you do if ASIC come knocking? I can only speak from having been through this once, but by getting good advice, we were able to move through the process in a reasonable time frame. While we are financially worse off in the short term, we are now in a stronger position to grow.

As a small business with big ambitions, fighting the regulator did not make strategic sense. We can now continue to build a business that fills a gap in the market, working with our partners to provide a product our customers enjoy the benefits of.

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