Inside ASIC podcast

Media clips: "I realised that the scammer took $49,900, which is my whole life savings."
"Life savings - it's hard to swallow when you lose all that money over 1 little transaction."
"He asked exactly the same verification questions as a HSBC representative.
I thought I was genuinely speaking to a HSBC employee."

Gillian Bradford: Now, the people you just heard are real victims of a bank scam that turned their lives inside out.
And if you've been following along at home, you'd know last year Inside ASIC actually kicked off with an episode all about scams, and this year we really wish it wasn't so.

But we're actually talking scams again because the people ripping us off are finding new ways to do it and ASIC keeps having to adapt and fight to find justice for the victims.

Hi, I'm Gillian Bradford and welcome back to Inside ASIC.

Now that case that ASICS taking against the Australian arm of global banking giant HSBC is still before the courts and it's just one piece of the work the Commission's doing to try to protect consumers from scams.
And I'm very pleased to say I'm joined now by Sarah Bower, who's the senior manager of enforcement and compliance at ASIC.
Sarah, Hi.

Sarah Bower: How are you, Gillian?

Gillian Bradford: And Sam Riggall is a senior lawyer with the scams team.
Sam, Hey.

Sam Riggall: Hey.

Gillian Bradford: Sarah, let's start with one of the scams that's top of mind right now.
Whether you call it SMS masking or spoofing, this is what many HSBC customers experience.
Talk us through exactly how this scam was catching people out.

Sarah Bower: Yes, we'd start by saying, Gillian, that many of these people that we've spoken to are intelligent, educated people who would tell you they are not the type of people who would fall for scams.
They'd never fall for a romance scam, they'd never buy a fake fixed income bond, they'd never buy cryptocurrency.
What they were doing was they were following a protocol of reporting suspicious transactions to their banks and as a result, losing in many instance, $50,000 in a matter of moments.

And for those listening that might say, well, this wouldn't happen to me.
I can just paint the picture of how some of these scams are operating.

Gillian Bradford: Yeah, tell us the hook that gets people in.

Sarah Bower: So, most people listening, Gillian, could pick up their phone right now and they would see a string of text messages from their bank.
Legitimate text messages.
Many of these bank impersonation scams include something called alpha tag spoofing, which involves a scammer interrupting a legitimate thread of text messages with a fraudulent message.
And those messages, the good ones, are balanced, they use balanced language like a bank would - they don't have typos, they have good English - notifying the customer that an online transaction has taken place, for example that they've just bought something on Amazon or a new phone has been linked to their account and it usually includes text like.

If you did not authorise this transaction, call the bank on, provide the phone number and quote the following reference number.

Gillian Bradford: Okay, so you think it's real, you call the bank. What happens then?

Sarah Bower: So, they - the scammer - might say something like, oh, I can see that you just transferred $10,000 in the last hour.
Is that correct?
And of course the customer panics and assures the bank officers that they didn't.
And it's at that point the bank officer swoops in to save the day.
They tell the customer that they'll immediately freeze the transactions and recall the funds.
And it's in that moment of crisis that the scammer tells the customer to go on their banking app and read out a one time passcode or something similar, which they say they need to stop the payments from going out of their account.

And unfortunately, it's during that moment of crisis that the customer makes the mistake of providing the one time passcode or other security information and the scammers in their account and start stripping money out.

Gillian Bradford: Sam, I want to go to another type of scam that's front of mine for ASIC right now, and that's dodgy investment scams.
Let's just take a listen to this scam investment ad using an AI version of the PM, Anthony Albanese.

Media clip: Thanks to machine learning, Quantum AI has achieved a high success rate of 94%.
This project is open now for Australians and the minimum investment amount is 350.

Gillian Bradford: And this is another one using Sky News presenter Chris Kenney and mining billionaire Andrew Forrest.

Media clips: Mr Forrest also claimed that none of the investors would lose their money.
I am so confident in the project's stability that I'm prepared to compensate any losses and pay $50,000 to anyone who loses money on my platform.

Gillian Bradford: Sam Riggall, what sort of challenge do these type of deep fakes pose for ASIC?

Sam Riggall: The scams are becoming increasingly sophisticated to the point where anyone could fall for them.
Yes, sometimes the videos that you'll see, they stutter a little bit.
They're not perfect, they are getting better at a very quick rate.

But it's - you've got to remember a lot of people these days are using internet from their mobile phones.
So they're looking at a small screen, they're not paying attention.
They click the link and the second stage of what is quite a sophisticated programme kicks in.
They're then at a website.
It looks whiz bang and they provide their contact details.

Gillian Bradford: So, for people who have scrolled right by and haven't clicked on them, what is the basic MO of the scammers?
Like how are they persuading people they're legit and getting them to hand over money?

Sam Riggall: There are a number of different types of websites but the main one people would first see is 1. attempting to get contact details because the next step in the process is to have someone call you from the scam call centre and walk you through the process.
Apply high pressure tactics and get the sale.
Often that sale is a small amount, a couple hundred bucks to get you started.

So, people are not as aware and risk sensitive as they would be if they thought this is something I'm going to invest lots and lots of money into.
They even go as far as showing you the investment returns you've made and maybe even refunding a small amount because it's giving you a payout to show this is legit.

So, I think the really important thing is just not trust what you see on your screen.
Like you can see a fully functional program that shows the amount you put in, shows the daily trade results, shows your money growing.
But it's so easy to fake that these days.
And as soon as you give your money to the scammer, it's not in that system, that system is completely fake.
The money has been pocketed from day one.

Gillian Bradford: And Sarah, on this HSBC case, we must emphasise it's very much before the courts, but as a journalist I was very much aware of a number of news stories about HSBC customers losing amounts probably late into 2023.
And what's ASIC alleging in this case?

Sarah Bower: So, as you said, Gillian, it's really important to say at the outset that these are allegations by ASIC, they're not proven.
But our case in the Federal Court has three elements:
The first is that we allege that HSBC failed to have adequate controls in place to protect their customers from scam related losses.
Secondly, we allege that it took them too long to investigate reports of unauthorised transactions.
And we found that in 66% of cases it was taking HSBC 100 days or longer to investigate a report of an unauthorised transaction.
And thirdly, we allege that it just took too long to get customers back to banking.

It took on average 95 days from the date a customer first reported an unauthorised transaction to get most customers back to banking for the period we looked at.
And we just say that's too long for customers to be locked out of banking.

Gillian Bradford: Sam, finally, to you it might seem like a bit of a game of whack-a-mole at some point.
Do you feel like ASIC's actually making a difference with these scam websites?

Sam Riggall: I do, and I think we are having a demonstrable impact in hardening the Australian environment.

We can't necessarily control what happens globally, but we can make Australia a less attractive target for scammers.
Websites play a key role in the chain of the scam ecosystem.
Without a website to collect the contact details, the process stops and without a website to host a fake investment platform to convince the consumer that their funds are growing, it stops.

If we shut down that website after the consumers deposited a few hundred dollars and before they make a big deposit, well that's we've saved that consumer our achievements in that working together with the National Anti Scam Centre and the whole of ecosystem approach that Australia has as starting to show dividends.

We've had a reduction in scam losses for two years running and we're actually also starting to see a reduction in the numbers of investment scam websites we're detecting.
So we do think the work we're doing is having an impact.

Gillian Bradford: Sarah Bauer, Sam Riggle, thank you so much.
Fascinating conversation, thank you.

Sarah Bower: Great to meet you, Jillian.

Sam Riggall: Thank you very much.

Gillian Bradford: Now, next up, we're going to be joined by consumer advocate Steph Tonkin to talk to us about the human cost of some of these scams.

And I'm joined now by Steph Tonkin, the CEO of the Consumer Action Law Centre.
Steph, you are with us in Season 1, and I'll include a link to that chat in the episode notes.
And today it's another really huge issue, Steph.

There would barely be an Australian who hasn't been touched by a scam.
Tell me what you're seeing at the frontline, how people have been affected.

Steph Tonkin: I think my main reflection on that question is, of course, there's financial fallout very significant for some people, people losing their life savings and the future that they planned for.
But also, there's a very significant, sometimes more so, emotional toll, psychological toll that being scammed can cause.

So, we speak to people who report that their parents are changed forever.
Lack of confidence transacting online, lack of confidence, engaging with other people, just a real sense of distrust after falling victim to a scam.

And very much that feeling of shame. Shame that they have been so silly in their own minds, which of course we know isn't true.
Scammers are highly expert criminals, but it doesn't mean that people don't feel shame and incredible grief at the loss after being scammed.

Gillian Bradford: Now, you dealt with a lot of HSBC customers.
For you, it's not just about the fact that these customers were scammed out of money, but how the bank dealt with them.

Steph Tonkin: When people were reaching out to their bank for help and again remembering people are losing huge sums of money and are in shock at the time that they're trying to get help, they were told they were stupid or the transaction they authorised it.
There's nothing you can do, Take better care next time.
What our clients report to us, quite sadly, is that their treatment by the bank when they are reporting a scam.
Sometimes after waiting hours holding online trying to speak to someone, or while on hold driving to a bank branch to try and speak to a bank representative, they find that the treatment by the bank sometimes is as bad as the scam itself.

Gillian Bradford: Steph, ASIC's done a couple of big reports on banks big and small, and I think it found something like 96% of total scam losses, you know, customers end up paying.
Is that good enough?

Steph Tonkin: Absolutely not.
It has to be incumbent on the businesses who have the resources and the scams intelligence.

It has to be incumbent on them to prevent the scams and only in really limited circumstances, in my view, should consumers have to pay.
Absolutely, there should be compensation when a business fails to keep their customers money safe.

In the HSBC case, there was some investigative journalism which identified that in some of those cases there were logins simultaneously or at the same time from two different hemispheres on a particular account.
Now, the technology exists to be able how to identify that, why didn't those flags go off? The HSBC scam again, it ran for many, many months.
And in fact, that same scam had happened at HSBC in the UK as well years prior. So they were on notice.
Yet what frustrated me about that particular case was that despite all of that, and despite the scam continuing for so long and hundreds of customers being impacted, the bank still said there was nothing they could do.
They could not have prevented the scam until right at the end.

Gillian Bradford: Steph, how important is it that ASIC took enforcement action in this case?

Steph Tonkin: This case involved widespread consumer harm.
Hundreds of people fell victim to the HSBC scam and lost significant sums of money.

That enforcement action should also serve as a deterrent and warning to other banks and financial services that aren't stepping up and protecting their customers in a way that they're required to under the law and in the way the community expects.

Gillian Bradford: Steph Tonkin, it was terrific to have you with us again. Thank you.

Steph Tonkin: Thanks for having me.

Gillian Bradford: I'm Gillian Bradford, thanks for listening to Inside ASIC.
Don't forget you can catch up with the latest episodes and all of last season wherever you get your podcasts.
Bye for now.

Media clips: "Brisbane's wettest day in more than half a century as the heavy rains and winds from ex tropical Cyclone Alfred.." 

"Businesses and homes are completely underwater.."
"..joins us from a roof."
"We're not the only ones. There's lots of us."

Gillian Bradford: Floods, cyclones and storms have taken a terrible toll on parts of Australia over the past few years.

Media clips: "Ruined stock and furniture is being tipped onto the footpath."
"Homes are still inundated, and the SES.."
"Our flood victims have been through absolute hell."

Gillian Bradford: After recent devastating natural disasters in Australia, one thing's pretty clear.

For many victims, the actual event is just the start of what can be a long and stressful battle to rebuild their life.
Hi, I'm Gillian Bradford and welcome to this episode of Inside ASIC, where we're going to get across some of the big issues with insurance. In just a little bit, we're going to dive into a report ASIC's just released about what insurers need to do to lift their game.
But first up, I'm joined by ASIC Commissioner Alan Kirkland.
Alan, terrific to have you back with us.

Alan Kirkland: Great to be back on the show.

Gillian Bradford: Alan, I say have you back because you joined us for Season 1 where we talked about people going through hardship and issues dealing with their bank and I'll link to that in the episode notes.
But today we're all about insurance.
And I want to ask you, because you did work as a consumer advocate for a long time before you came to ASIC, what's your observation of the human impacts of this string of natural disasters?

Alan Kirkland: Now look, my history with these disasters stretches back over a decade.

During the really horrific floods that happened in 2010, two 1011 people might remember they hit South-East Queensland particularly hard and northern NSW.
I was hitting up Legal Aid NSW, which has teams of lawyers that go out and help people in the immediate aftermath of these disasters.

And I spent the next decade or so at Choice advocating for better treatment for customers and now at the ASIC end, really trying to regulate how insurers respond.
And I guess the thing that really troubles me is that we're still seeing persistent problems with the way in which insurers respond.
And that's in a context where these disasters are just getting worse.

All the evidence says they're becoming more severe, more frequent, and that's why we need an industry that's even better prepared than ever to respond.

Gillian Bradford: Like you said, you've been watching this cycle on repeat for more than 15 years now.
What are some of the key concerns of things which just keep going round and round for you with insurers?

Alan Kirkland: Well, there are problems at the front end with people not understanding what cover they have.
So, even though we have a common definition of flood now, there are other types of water damage like rainwater runoff and storm damage that are covered in different ways and different policies and have different definitions.
And that can lead to a lot of confusion when people are even wondering whether they can make a claim.

We see poor communication by insurers not letting people know where their claim is up to or communicating ways that distressed people can understand.
We see inadequate resourcing, so not having enough people to handle claims and to handle complaints.

Gillian Bradford: Insurers have been under a whole heap of scrutiny over the past few years, including significant political and public pressure over these latest weather events.
I'm wondering where ASIC fits in here.

Alan Kirkland: There is certainly a lot going on and there's a big complex debate around the many issues affecting consumers trying to get access to insurance.
Our role within that is very specific.

So, effectively we regulate the claims that insurers make to consumers.
So, are they accurately describing the policies and marketing them in a fair way and then we regulate the claims handling.
So, when somebody makes a claim, insurers are required to handle that efficiently, honestly and fairly and so we can look at that.
They're also required to treat their customers in good faith.
And so that's when we can step in, if we see evidence that insurers are failing to handle those claims appropriately, we can go in and do a surveillance like we've done in response to the '22 floods and, and go out publicly and talk about the problems that we've found.
And in the more serious cases, we can take enforcement action in the courts.

Gillian Bradford: And Alan, that's what I do want to understand, because it does seem that ASIC is frustrated.
Insurers have been slow to act to fix some of the issues you identified years ago.
Is there action you're prepared to take if they don't get their house in order?

Alan Kirkland: We've got a series of investigations underway in relation to claims handling failures in recent years and you should expect to see us take more serious action within the next year on some of those matters.
And we've got a very strong track record of taking that sort of action against insurers.
We've taken several major actions for insurers failing to live up to the pricing promises they've made to their customers.

One of those resulted in the largest fine ever given to a general insurer in Australia, which was a 40 million dollar civil penalty.
So that shows we're willing to take action, but also the courts are willing to impose significant penalties where insurers fail in their obligations to their customers.

Gillian Bradford: Alan Kirkland, thank you so much.

Alan Kirkland: Thanks, Gillian.

Gillian Bradford: Well, Next up, we're going to be taking a deeper dive into ASIC's latest report on home insurance.
And I'm joined now by Nathan Bourne, Senior Executive Leader, Credit Banking and General Insurance at ASIC.

Nathan, Hello.

Nathan Bourne: Hello, Gillian.

Gillian Bradford: And Julia Davis, Senior Policy and Communications Officer at the Financial Rights Legal Centre.

Julia Davis: Hi, thanks for having me.

Gillian Bradford: Julia, let me start with you.
What should people expect from their insurance company when they get hit by some sort of weather event?

Julia Davis: I mean, they should expect the company to come through with the promise that they thought was made when they bought that product.
I mean, insurance is a promise.
They're going to be there for you when you need the most. They have the expertise. They know what needs to happen after a disaster.

They're going to come in, have some empathy and tell you, "you can get rid of these wet, mouldy carpets.
Don't worry, we've got you.
We're going to put you in temporary accommodation.
You know, if you need space for your dogs, or you need space for your kids with disabilities, or find something that suits, don't worry."

Gillian Bradford: And I want to hear now directly from some of the people hit by some recent events, just to give a sense of their experience with insurance.
Let's take a listen.

Media clips: "If it was a storm, we're probably insured.
If it's a flood, no. This was just devastation beyond belief."

"We had the same hydrologist on the same day and we have three different outcomes and it's very confusing.
I don't understand any of it."

"After the 2022 floods he was hit with a tenfold increase in his insurance premium."
"It went from $2,500 to $27,000."

Gillian Bradford: Julie, your reaction to some of those experiences?

Julia Davis: You know, unfortunately, those are the types of people that we talk to in my service.
There are people from every walk of life who did not expect to be in this situation and now are very vulnerable.

You know, everything that they thought they had was turned upside down.
You know, people might have bought that insurance 10 years ago and just kept hitting renew and haven't really looked at it closely since then.
Maybe they've done a renovation and forgot to tell the insurer or, you know, maybe the insurer sent them a supplementary PDS that they never read.
That's pretty standard consumer behaviour.

But unfortunately, after a storm, after a flood, after a disaster, it's too late to go back and read the fine print.
You know, you either have the right cover or you don't.
You either have enough cover or you don't.
And it is really heartbreaking to talk to people who thought they'd done everything, thought they'd crossed all the T's and dotted all the I's, thought that all their direct debits were going through properly, and then when they find out something's gone wrong, it's too late.

Gillian Bradford: Nathan, you've been tracking a number of our big home insurers for years now and you've conducted a review lately, Well, a couple of reviews this year.
What do they tell us?

Nathan Bourne: So, our latest report is really looking at the programs of work that the insurers have been doing since the 2022 floods.
So, we came out with a whole range of recommendations from that work.

Those floods also spurred a number of other reports from industry and even a parliamentary enquiry.
So, there's a big focus on insurers for the past year and it will continue into the next year.
Our review tells us that insurers are doing a lot of work.

They are improving their systems and their programs and how they treat customers, but it's really inconsistent.
So, what we're seeing is that some insurers seem to be doing quite well in their programmes, but there are some that are really not anywhere near where they need to be.

Gillian Bradford: What's one of the biggest recurring issues for you?

Nathan Bourne: So, we've had a lot of issues with communications between the insurers and the customers.
It goes to some of the points on: does the customer really know what they're insured for? But also when you put in a claim, if you've been the subject of a natural disaster, you're normally in a very vulnerable position and you need that communication on an ongoing basis.

I think the insurers really failed in that regard to keep customers engaged, communicated with throughout the whole process and they just needn't have the systems to back that up.

Gillian Bradford: Julia, I saw you nodding a lot there.

Julia Davis: Yeah, absolutely.
So, I mean, I'll start by saying that we do understand that what we're asking of insurers after a major event is daunting.

You know, we're asking them to provide tailored, empathetic service to thousands, maybe hundreds of thousands of customers at the same time.
But that's the job. That's the promise.
You know, you made that promise to millions of customers and it is critical that you get it right because after a natural disaster, we know the consumers are experiencing significant ongoing trauma, family breakdown, mental health crises.

This is a moment where they need their insurer to show up and get it right the first time.

Gillian Bradford: Nathan, what's been your message to the industry about how they should deliver on this promise?

Nathan Bourne: So, our message to the industry has been about transparency, but also giving information to clients and customers in a way that can be interpreted easily.

It's in simple plain language terms, not using legal terms.
And for example, if there's a complaint about a particular claim, don't refer them to page 62 of a PDS to say, well, it's, it's not necessarily in the policy or there's some kind of broad vague statement.
That's where some of the issues arise.
If we have good clear communication, not only at policy inception but at renewal times that can go to well, what's driving the premium increases? As well as what are wear and tear and maintenance type provisions in contracts and what does that mean for a client.

So transparency, simplicity where possible is very important and we've been driving that message with insurers.
I think that what that would do is reduce the amount of complaints.

Gillian Bradford: What sort of improvements should we be seeing right now from the sector?

Nathan Bourne: So, what we should be saying and we've had a fairly benign year for 2024.
We've just had some recent weather events.
We expect that insurers are dealing with their customers better as a result of ex-Tropical Cyclone Alfred, for example.
We would expect it to translate through their better communication, better claims handling.
They did a lot of preparatory work.

There were phone calls going out to and messages going out to 1/4 of a million customers to make sure that they were aware of what their policies were, the sorts of support that insurers could provide.
I think that's a great step and it shows the green shoots of the benefits of having these programmes of work for them to provide better services for their customers.

Gillian Bradford: Julia, what's your observation?
I know it's only anecdotal at this stage of how insurance companies have been dealing with their customers in the wake of these 2025 weather events.

Julia Davis: Like Nathan said, there are improvements.

You know, we have not heard some of the shocking stories that we heard right after the 2022 floods.
But the work we do has a really long tail legal advice around insurance disputes.
You know, we sometimes get calls from people where the disaster was four years ago.

For me, the thing that I hope to see dramatic change is in dealing with people experiencing vulnerability because, you know, often consumers who are older or disabled or, you know, or dealing with children with disabilities or are unwell, you know, they require considerable extra care.
And unfortunately, we regularly see insurers failing to provide them with the care that they need.

Gillian Bradford: Julia Davis, Nathan Bourne, thank you so much for joining us today.

Nathan Bourne: Thank you.

Julia Davis: Happy to be here.

Gillian Bradford: Next up on Inside ASIC.

Episode 6 preview: Many of these people that we've spoken to are intelligent, educated people who would tell you they are not the type of people who would fall for scams.
They'd never fall for a romance scam. they'd never buy a fake fixed income bond, they'd never buy cryptocurrency.

What they were doing was following a protocol of reporting suspicious transactions to their banks and as a result losing in many instance $50,000 in a matter of moments.

Gillian Bradford: I'm Gillian Bradford and thanks for listening to Inside ASIC.

Don't forget you can catch up with the latest episodes and all of last season wherever you get your podcasts.
Bye for now.

Gillian Bradford: Hi, I'm Gillian Bradford and welcome back to Inside ASIC.
Throughout both seasons of the show, we've dealt with a lot of stories of consumers being ripped off and ASIC's fight to protect people from financial harm.

But what's our corporate regulator doing specifically to drive positive outcomes for Aboriginal and Torres Strait Islander peoples?

Media clips: It is not reasonable for First Nations people to have their money gobbled up by this business and leave nothing for food or other essentials.

One postcode area, which includes Alice Springs, was among the worst affected with around 3,000 customers collectively charged more than 200,000 in fees over 2021 and 2022.

Gillian Bradford:  In this episode of Inside ASIC, we're going to be looking at some of the work being driven by the specialist Indigenous outreach program team within ASIC.

It's not work that gets a lot of attention in the national media, but it's a critical piece of what the Commission does when serious financial harm is at stake.

And first up, I'm joined by someone operating at the front line of some of these issues, Senior Financial Counsellor and Boandik woman.

Bettina Cooper helped build the First Nations debt helpline called Mob Strong Debt Help.
Bettina, thanks so much for joining us.

Bettina Cooper: Thank you.

Gillian Bradford: Bettina, just tell us a bit about MOB strong financial counselling.
Who are you helping and what are some of the typical issues you're dealing with?

Bettina Cooper: Well, Mob Strong Debt Help is a national debt helpline for First Nations people.
We're manned by financial counsellors and solicitors.

We have people call us from all different parts of the country about money worries, anything from a dodgy car loan to being charged bank fees they didn't expect or having money coming out of their Centrelink payment they are not sure about, as well as potential issues around anything that worries them with money.

Gillian Bradford: Now I want to talk about one issue that really came to a head last year.
Let's just have a quick reminder with this news story.

Media clip: It's a store which describes its target market as predominantly indigenous consumers who are receiving Centrelink.

Now the corporate regulator has thrown the book at Urban Rampage.

ASIC said it was concerned that Urban Rampage's consumers are vulnerable, at risk of financial hardship and many may currently be experiencing financial distress.

Gillian Bradford: So Bettina, this case centred on a couple of chain stores selling homewares and clothing operating across the NT/WA in Queensland, whose clients were mostly using Centrepay, which is a government service which allows people to automatically pay bills out of their fortnightly payment.

Just tell us how Centrelink works firstly for people who mightn't be familiar and some of the issues you were seeing with your clients.

Bettina Cooper: Let's start with the fact that Centrepay is a payment system attached to Centrelink and that the system itself does benefit those who need help managing their money or would like to have their utility bill or an acceptable bill taken out before they get their pension or their Abstudy or something along that.

But the problem is that some businesses got on Centre Pay that should have never been on there, and those businesses that got on there that shouldn't have been on there took advantage of that system.

The use of send and pay by business is a privilege, absolute privilege, because you're getting money before people get their own money.

But unfortunately, some people got on there and they used it as a vehicle for financial abuse.

Gillian Bradford: Now, I know financial counsellors were trying to sound the alarm for years over what was going wrong with Centrepay.
What were some of those things that you were seeing early on?

Bettina Cooper: Well, ironically one of my colleagues from Financial Rights wrote a letter in 2013, we wrote almost a duplicate letter in 2023, over 10 years of this abuse.

It was people being charged for Centrepay deductions that were unaffordable with no cheques and balances to make sure they could afford that. Include things like consumer leases, household goods.

Majority of their pay was gone, and they left them very little money for food or necessities, which meant they were reliant on emergency relief in those areas and - emergency relief money - there wasn't enough to go around.

Gillian Bradford: So, it was driving a lot of Indigenous Australians into further financial stress.
So, tell me about when ASIC took up the case and put a stop order on some of these stores offering Centrepay last year?

Well, that alarm bell was rung by financial counsellors in those remote and regional areas, in Catherine, in Nullamboy and other areas in NT.

And we also got involved and first hand witnessed some of their harms.
And what we know is that people were being signed up for deductions for clothing, often in large amounts, and being encouraged to make purchases that they couldn't necessarily afford.
And this was something that happened time and time again. So, they'd go back and sign up for more and sign up for more.
And what that meant was people were coming in and saying, I don't know why this money's coming out, or I don't remember buying this or this is how much.

So, there was some confusion at first we thought, but then when we looked into it deeper, it was too patent and too systemic.

Gillian Bradford: So, how much of an impact did it make when ASIC actually did get involved?

Bettina Cooper: When ASIC listened and heard and collected the evidence, the benefit was that eventually I will take action against those stores and those stores today are no longer allowed to use Centrepay as a form of payment, which means that people can go there and still buy goods, but they can buy goods with money they have, not money they don't have.

The benefit is that people have the ability to have more money in their hand and make a decision, and the cycle of debt that was created by repeated charges and centre pay has stopped.

Gillian Bradford: And Bettina, another issue you've worked closely with ASIC on is banking - again, let's just have a quick listen to this news story from last year.

Media clip: A new report from the Australian Securities and Investment Commission found low income Australians, including First Nations peoples and those receiving government payments, are trapped in high fee accounts despite being eligible for low or no fees.

Gillian Bradford: So Bettina, ASIC's intervention with the banks last year, this big report on better banking, tell me what a lot of your clients were facing before ASIC got involved.

Bettina Cooper: It's not always obvious to people, but if you're on a Centrelink benefit, you're entitled to a low fee, no fee account and that's what banks should be providing you.

And it should be up to the banks to inform and educate their customer when they sign up for a bank account or when they're a return customer that that is an option they have.

Regrettably, that was not happening with the banks and that meant a lot of customers who are on Centrelink pensions, age pensions, disability pensions were being charged fees from anywhere from $4-$10 for their monthly access to their own monies.

That could have been avoided by the banks having a proactive attitude, but unfortunately it took ASIC to highlight this behaviour for it to be changed.

Gillian Bradford: Bettina Cooper, thank you so much for shining a light on some of these issues. Thank you.

Bettina Cooper: Thank you.

Gillian Bradford: Next up, we're going inside ASIC's Indigenous outreach team to see how they've been able to drive some of these really big changes.

And I'm joined now by Danille Abbott, who's a senior manager of the Indigenous Outreach Program. Danille, Hi.

Danille Abbott: Hi, thanks for having me.
And Jessica Naimo is a senior lawyer within the team.
Jess, great to have you with us.

Jessica Naimo: Thanks, Gillian.

Gillian Bradford: Danille, it was great to talk to Bettina Cooper to really understand how ASIC is making a difference to people's financial well being.

Now this specific issue with Centrepay, I know policy reform is in the pipeline that would really limit what people on Centrelink can pay for using this facility.

But take us back to last year, why there was a case for ASIC to intervene?

Danille Abbott: Yeah, absolutely.

A lot of the concerns being raised with ASIC came from service providers who, you know, they're the ones with boots on the ground, they're the ones assisting community members with financial relief applications and emergency relief applications.
And they were really seeing the impact of that harm.

So, they were the stories that were shared with ASIC, which caused ASIC to have a closer look at their businesses conduct and see what regulatory levers we had available for us to allow us to respond.

Gillian Bradford: So how do you get a sense, you know, this isn't just one or two people, this is a real systemic problem affecting a big slice of the Indigenous community we're trying to protect?

Danille Abbott: Our team knows only too well there's only a portion of First Nations consumers who are able to access services like financial counsellors.

So, when we hear from financial counsellors about, you know, one to a handful of consumers who are experiencing the same types of issues, particularly where the same store is involved, that definitely gives us cause to be concerned about the conduct and the broader impact that that store or the business may be having across communities.

Gillian Bradford: Now, Jess, this Better Banking report is your baby.

It made for pretty jaw dropping reading and at the heart of it is an alarming number of low income indigenous customers who should have been given a no or low fee account with their bank, but they were actually signed up to high fee accounts.

Just tell me how this issue came to your team and how you knew it was going to be a big one?

Jessica Naimo: So, the issue I think had been something that consumer advocates and financial counsellors working on the ground had been aware of for some time.

It came up as a case study in the Royal Commission back in around 2018 where there was a case study regarding bank and Indigenous consumers in a very remote part of Australia on really high fee accounts and having a lot of trouble changing to a low fee account.
So, it was something that had been on the books for a while.

But I guess what triggered it for us is the Banking Code of Practice from 2019 had a requirement that banks offer these low fee accounts to people who are receiving Centrelink and, you know, Veteran affairs type payments.

So, we knew it was something that banks had an obligation to address, but it wasn't being addressed and we heard consistent complaints from people on the ground about this.

Gillian Bradford: Now, you very deliberately gave the banks the findings of your report and arm them with really specific actions they needed to take to fix it.

So what's happened for Indigenous bank customers since you wrote the report?

Jessica Naimo: So firstly, banks have committed to refund over $25 million in fees to impacted customers.
So, they are First Nations customers as well as other non-indigenous people living in those locations.

There's also been high numbers of customers migrated from high fee to low fee products.
I believe over 200,000 have actually been migrated including over 9000 customers on app study.

So yes, in that sense, there's been some very swift action taken by those project banks.

Gillian Bradford: Danille, anyone who's ever got caught up in the complaint system of a big corporation knows it can be really, really challenging to get help sometimes.

You have to be really, really persistent and navigate complex systems.
It sounds like for indigenous consumers as a whole cohort, this is an important part of what your team does.

So, give us a sense of how you work with other agencies or corporations when you think there could be a systemic issue.

Danille Abbott: I think as a starting point, our team operates an Indigenous helpline.
We have a no-wrong-door approach.

We don't expect either advocates or consumers to understand where they should be directing their issue and are more than happy to work through those complex systems to get the individual consumer or the advocate assisting them to the right door as much as possible.

We're also, I think, as an agency ASIC's much more proactive at talking to other organisations where there is a crossover in jurisdiction.

Some of these complex problems don't sit with just one agency alone, and we have to be having conversations and sharing experiences and trying to problem solve as a group so that those experiences of consumers on the ground and communities on the ground don't continue on and on.
It's important for us to have those conversations and land approaches as a group sometimes.

Gillian Bradford: Jess Naimo, Danille Abbott, thank you so much for talking to us today.

Jessica Naimo: Thanks, Gillian.

Danille Abbott: Thank you.

Gillian Bradford: Next up on Inside ASIC.

Episode 5 preview: I guess the thing that really troubles me is that we're still seeing persistent problems with the way in which insurers respond and that's in a context where these disasters are just getting worse.
All the evidence says they're becoming more severe, more frequent, and that's why we need an industry that's even better prepared than ever to respond.

Gillian Bradford: I'm Gillian Bradford, thanks for listening to Inside ASIC.
Don't forget, you can catch up with the latest episodes in all of last season wherever you get your podcasts.
Bye for now.

Gillian Bradford:  Whether it's in the supermarket aisle, buying clothes or nearly anything else in your life, there are a host of companies out there making claims about their environmental credentials.

Media clips: It seems everywhere you look there are signs, logos and advertising saying initiatives are green or eco friendly.
All natural, sustainable, environmentally friendly.
Investors want to invest in companies that have lower carbon footprints.

Gillian Bradford:  And for ASIC, this has been a serious focus as a bunch of financial products like super funds have made green claims about how they invest, but simply can't stack them up.

Media clip: The corporate regulator ASIC has been leading a crackdown on super funds, misleading members about their green credentials.

Gillian Bradford: Hi, I'm Gillian Bradford and welcome back to Inside ASIC.
I think it's fair to say the Commission has well and truly put greenwashing on the map of corporate Australia over the past 12 months.

After a few landmark rulings in the Federal Court, Vanguard Investments Australia was ordered to pay a record $12.9 million penalty, while Mercer Super was ordered to pay $11.3 million.
And Active Super copped a fine of $10.5 million for greenwashing misconduct.

So in today's episode of Inside ASIC, we're going to get across why green washing matters and how our corporate watchdog uncovered the wrongdoing.

First up, I'm joined by Professor Jeremy Moss from the University of NSW, who's taken a deep dive into some of the ethical issues in climate transitions.
Jeremy, thanks so much for talking to us.

Prof. Jeremy Moss: Pleasure, good to be here.

Gillian Bradford: Let's start with why greenwashing matters, because some people might think of it as just a harmless form of marketing.

Prof. Jeremy Moss: Well, greenwashing matters, and it matters a lot because fundamentally it's a deception.

It's a deception that an institution or a company performs on another institution or a consumer by advertising a product that's supposedly climate or environmentally friendly when it's not in fact climate or environmentally friendly.

And so, if we think deception is wrong, then we ought to think greenwashing is wrong, but it's also wrong or it's bad for another reason, and that is it's a break on climate action.

So, one of the reasons that greenwashing should be of concern to all of us is because it gives the impression that something positive is happening vis-à-vis climate when it's not, and that delays climate action because it reduces the sense of urgency that we have to do something.

Gillian Bradford: And Jeremy, even the term greenwashing is pretty new. What's been your observation on the growth in this phenomenon?

Prof. Jeremy Moss:   Well, unfortunately the growth is quite large and that's because a lot of companies, I think have realised that they can perhaps attract more customers or perhaps not even to make new money, but to keep making the money that you are by pretending that you're something that you're not.

I mean, the net zero example is a good one because you hear the words net zero, you think, well, great, this particular company is transitioning towards net zero.

But unless we actually know what that means, is it a voluntary commitment?
Will it only be a transition that happens in the distant future? 2050/2060/2070 in the worst cases.

Gillian Bradford: Corporate Australia obviously invests pretty heavily now in ESG, environmental, sustainable and governance credentials and also in promoting those credentials.
What are some of your concerns generally about the types of claims being made, especially when it comes to financial products?

Prof. Jeremy Moss: Well, firstly, that they're too vague.
So, it can mean almost anything.
If you say that you're doing something that's ethical or something that's sustainable, those terms are too vague. They need to be given some content.

Secondly, what I think consumers need to be able to do, and indeed institutions, is they need to be able to verify whatever claims are being made.
And verification sadly can't be left to the company itself.

So, they need to have clear reporting guidelines that people can check on so they can understand the terms that are being used and also, crucially, whether those terms or those goals are being met in a meaningful way.

Gillian Bradford: We have now seen a few big penalties in these greenwashing cases as it's taken to the Federal Court.
Do you think this could turn the tide on this conduct here in Australia?

Prof. Jeremy Moss:  I would like to think that it's certainly a contribution to turning the tide.
Yes, If companies know that they can get a big fine for misleading activities, misleading advertising about their products, then that is, I think, a step in the right direction.

I'd like to see some firmer government regulation that goes along with those sorts of laudable efforts to bring these companies and their activities into the spotlight and penalise them if they are doing something wrong.

So yes, the legal action is certainly a step in the right direction.

Gillian Bradford: Professor Jeremy Moss, thank you so much for speaking to us today.

Prof. Jeremy Moss: My pleasure, thank you.

Gillian Bradford: And Next up, we're going to hear from ASIC about how they uncovered some of the green claims on these financial products just weren't stacking up.

And I'm joined now by Marita Hogan, who's the senior executive leader, enforcement and compliance at ASIC, which includes leading the work cracking down on greenwashing.
Marita, hi.

Marita Hogan: Hi there.

Gillian Bradford: And Andrei Bacu is an ASIC analyst who's also done a big piece of work on greenwashing with the superannuation team.
Andrei, hi.

Andrei Bacu: Hi everyone.
Gillian Bradford: Marita, ASIC spent a lot of time in court, especially over the last 12 months on greenwashing.
Just tell me why greenwashing matters to ASIC?

Marita Hogan: So, for a couple of reasons, it really matters because if these green credential claims aren't true, that's depriving consumers.

So, mum and dad investors - of investing their money in accordance with their values.
And if a product issuer is saying they're going to invest in accordance with particular green or ESG values, then that mum and dad investors should be able to trust that in fact that's how their money is being invested.

It's also undermining the efforts of businesses that are actually genuinely pursuing green or ESG goals.
And so those businesses that are accurately and fairly doing this work shouldn't be disadvantaged by those who are not being accurate.

Gillian Bradford: Andrei, let's just take the case of Mercer Super. Now, it made statements one of its investment options was, quote, deeply committed to sustainability.
I want to understand how ASIC discovered those claims just weren't stacking up.

Andrei Bacu: Sure.
As part of our work, we obtain intelligence from external parties in the form of reports of misconduct or other engagements.
We reviewed Mercer's website and statements and identified concerns that we believed we needed to pursue further from a regulatory perspective.

Those statements were marketing.
They were marketing the Sustainable Plus options as suitable for members who are deeply committed to sustainability because they excluded investments in companies involved in carbon intensive fossil fuels like thermal coal.
And then some of those exclusions were also said to apply to companies involved in alcohol production and gambling.

So, what we did is we followed the footsteps of those statements all the way back to the documents that provide information around what are the investment holdings of the fund, which is the portfolio holdings disclosures.
And we found investments in companies involved in industries that the website statement said were excluded.

For example, we found investments in companies involved in carbon intensive fossil fuels like BHP and Whitehaven Coal, or companies that were involved in production of alcohol like Pipe Wiser, Carlsberg, Heineken.

Gillian Bradford: So it really is a forensic following of an online paper trail here.

Andrei Bacu: Absolutely.
In general, our reviews were based on publicly available information such as website disclosures, online articles, media ads, and then following those steps from the marketing statement all the way to the source documents to see whether or not those statements match with the actual investments.

Marita Hogan: And I do just want to add, these cases really come down to data sets.
And the story of these three cases is a real story about the persistence and cooperation of the teams to build their own data sets when sometimes the publicly available data sets just were not there.

Gillian Bradford: ASIC has spent a lot of time in court on greenwashing recently.
Mercer, Vanguard Investments and Active super, just a few of the high profile cases.

But we do have to point out, while this is the stuff people might see in the news, that's kind of the end game of a huge piece of work you've been doing to try to stamp this conduct out.

Marita Hogan: That's right.

So, the three civil penalty actions to date form just part of the overall toolkit that ASIC's been using to address greenwashing.

And ASIC's greenwashing work is a really neat case study in setting regulatory priorities and then delivering on those priorities in terms of enforcement outcomes for a deterrence impact in the market.

So, what we did was we issued regulatory guidance in May 22, which was a message to the market about how to avoid greenwashing when offering and promoting sustainability related products.

And then we made a further announcement in August 22 that it was going to be a Commission wide strategic priority for ASIC so that's sustainable finance including greenwashing would be a priority.

And then we followed up in February 23 with Asic's first civil penalty action with respect to greenwashing misconduct that was filed against Mercer.

And so that was in relation to some misleading and deceptive statements regarding investments that were held by the Mercer fund.

Gillian Bradford: Marita, I want to run you quickly through a few examples in that Info Sheet that ASIC's pointing to, to help companies do the right thing.
And we will link to that in our episode notes.
But can you just briefly tell us why these are not okay?

And the first example you've got in that Info Sheet is a sustainability related product labeled a no gambling fund.
But in it's T's and C's it says the product may invest in companies that earn less than 30% of their total revenue from gambling.

Why isn't that okay?

Marita Hogan: So this really goes to the "can you make a statement that completely disqualifies what you're going to do and then get out of it with the fine print?"

And the answer is it's not okay.

So, there's jurisprudence now to say that if you say there is no way that we will be investing, say, in fossil fuels, the reasonable consumer can't be expected to then go off into the fine print and find out whether in fact, in some circumstances you are going to invest in fossil fuels.
And these are these circumstances that are in .8 font.
So, that's just not reasonable and that's not okay.

Gillian Bradford: And the second one, if on its website an issuer claims that it's committed to making investments that contribute toward positive impacts for its investors and the world, why is that problematic?

Marita Hogan: So, that's just too vague.
You know, what does it mean? What are positive impacts?

And so, when you are a financial product issuer, so that is you might be a credit licensee or you might be an issuer of a superannuation fund or a managed investment scheme, you really have an obligation under your licence conditions to be clear and to be efficient, honest and fair.
And part of that is communicating clearly exactly what you mean when you're promoting your product.
And for me, that's just not clear.

Gillian Bradford: And Marita, we have mentioned now ASIC's had a number of cases before the Federal Court.
Are you confident this is going to have some type of impact on stamping out this conduct?

Marita Hogan: We've seen this impact already.
So, we've already seen a number of licensees, including superannuation trustees, really change their approach to how they are representing their green credentials.
And by this, I mean it's tightened up. It's more accurate.

They're also ensuring that they're not letting their marketing departments get ahead of the message.
And so that is not just getting too excited about what they want to say to promote the product such that it's not accurate in terms of what they're doing in terms of ESG screenings or not investing in certain types of investments.

Gillian Bradford: Marita Hogan and Andrei Bacu, thank you.

Marita Hogan: Thanks very much.

Andrei Bacu: Thank you.

Gillian Bradford: Next up on Inside ASIC.

Episode 4 preview: It's not always obvious to people, but if you're on a Centrelink benefit, you're entitled to a low fee, no fee account and that's what banks should be providing you.
And it should be up to the banks to inform and educate their customer when they sign up for a bank account or when they're a return customer that that is an option they have.

Regrettably, that was not happening with the banks and that meant a lot of customers who are on Centrelink pensions, age pensions, disability pensions were being charged fees from anywhere from 4 to $10.00 for their monthly access to their own monies.

That could have been avoided by the banks having a proactive attitude, but unfortunately it took ASIC to highlight this behaviour for it to be changed.

Gillian Bradford: I'm Gillian Bradford, thanks for listening to Inside ASIC.
Don't forget you can catch up with the latest episodes and all of last season wherever you get your podcasts.
Bye for now.

Gillian Bradford: Right now, we might just be witnessing a really fundamental change in Australia's financial markets.

Media clips: “Everything about this captures the imagination.”
“And if you're scratching your head thinking, what's she talking about, well, don't worry if this one's not on the tip of your tongue because outside of financial circles, it kind of has been flying under the radar.”

Gillian Bradford: Hi, I'm Gillian Bradford, and welcome back to Inside ASIC.
And today, we're going to be talking about the rise of private markets.
And by this I mean the global trend away from listing on stock markets, with a lot more firms choosing to raise equity privately.

Media clips: “AirTrunk, the Aussie data centre business founded by Robin Cooder in 2015, has reportedly been sold to US private capital giant Blackstone.”
“It's the biggest deal of the year.”
“The price, get this, was $24 billion.”
“So how's this AirTrunk deal?”
“Well, this is private capital at work, isn't it?”

Gillian Bradford: Yep, financial journos went pretty crazy for this AirTrunk deal last year, and it's fair to say investors, banks, regulators and the markets more broadly are trying to wrap their heads around if this is a taste of something bigger.

So, in today's episode of Inside ASIC, we're all about understanding private versus public markets, why it matters and what's the role of our corporate regulator when these deals are being done behind closed doors.

Well, to kick off this conversation, I'm joined now by Carole Comerton-Ford.
Carole is Professor of Finance at Melbourne University, and she was also commissioned by ASIC to write a report on the state of our public equity market.

Carole, thanks for talking to us.

Carole Comerton-Ford: thanks for having me.

Gillian Bradford: Well, it feels like the billion-dollar question after that air trunk deal. Once upon a time to raise that sort of capital in Australia, we'd be talking about listing on the Stock Exchange.

But now should we expect that that sort of private deal is just part of the landscape?

Carole Comerton-Ford: I think so.
I think there's evolution in both the private markets and the public markets, and both are critically important to the economy.
And as more private capitals become available, I think it's not unsurprising to see large deals going to the private markets.

But I don't think we'll see many of that magnitude in the foreseeable future, but not impossible.

Gillian Bradford: So why have private markets become more attractive to some companies in today's economy?

Carole Comerton-Ford: So, private markets have become more attractive for a couple of reasons.
Firstly, the sort of the rise of private capital being more readily available.
So, there is an abundance of private capital, and obviously if you've got a trade-off between taking private capital where you've got very little in the way of disclosure burden and governance obligations, offset that against the public markets where there are higher burdens and obligations.
If you have that choice, the private market is obviously attractive.

Gillian Bradford: So, have Australia’s public markets become over regulated?
What are you hearing from company directors about this?

Carole Comerton-Ford: Yeah, so I think that's a bit of a conundrum.
When I talk to company directors or people in the investment markets, they say the ASX is overburdened with governance and disclosure obligations.
But none of that has changed in the last two years.
There have been no major increases in regulation in the Australian market over that period, and yet we've seen this big decline in in number of listings.

2021 was actually the second highest year for IPOs in the Australian market ever.
So, somehow from 2021 through to 2024, there's a perception change of how regulated the market is, but no real change in regulation.
So, I think there's two possible explanations for why that has changed.

I think one is just the abundance of private capital.
So again, people now have the ability to go to private markets rather than public.
And I think another possible explanation is changes in community expectations around how directors should behave, directors of public companies.
And I think the directors feel that burden.

Gillian Bradford: Okay, so there’s public licence to operate?

Carole Comerton-Ford: Exactly. Exactly.

Gillian Bradford: Australia is a pretty small player in global equity markets, but what are some of the lessons we might be able to take from overseas markets?

Carole Comerton-Ford: So I think in the US people have also argued that the decline is due to over regulation, but the academic literature has studied that extensively and suggests that it's not really the regulation that has driven that change.
It's the changing nature of companies and the rise of private capital.

So, a good example to think about is a company like Instagram, which was acquired by Facebook back in 2012 for a billion dollar valuation.
So, we'd normally think a company like that should be going public, but it didn't.
They were acquired Facebook, and there's probably 2 main reasons for that.
One, they didn't need lots of capitals.
They didn't need to go to the public markets to raise capital.
And two, being acquired by Facebook gave them a very large customer base to tap into very quickly.

So, they can grow much more quickly through being acquired by a large company rather than having to grow organically on their own.
So I think we need to be mindful of that and not jump to regulatory change, but to understand the drivers and the landscape better before making change.

I think most overseas market regulators have got better visibility of the private markets than ASIC has.
So, I think there is a need for the starting point being having better visibility and better transparency around fund performance, fund holdings, fees and so on.

Gillian Bradford: And Carole, there's certainly a perception that private markets will get you a bigger return. Does that actually stack up?

Carole Comerton-Ford: So, I think one of the reasons why investors are pouring money into private markets is because of the catch cry that you hear that private assets outperform public assets.
But I think the evidence on that is far from clear.

If you look at the academic literature globally, that was true a decade or two decades ago.
I don't think it's necessarily true anymore.
And in fact, in most recent times, public markets have been outperforming private.

So, I think investors really need to have better quality information to assess performance and to assess risk in order to evaluate whether this claim that private markets outperform public markets is true.

Gillian Bradford: Professor Carole Comerton-Ford, thank you so much for talking to us.

Carole Comerton-Ford: Thank you.

Gillian Bradford: And next up, a couple of ASIC’s experts are going to talk to us about how the Commission's responding to this shift from public to private.

And I'm joined now by Senior Executive leader, Market Conduct, Andrew Templer, and senior Executive Leader, Strategic Projects, Jane Eccleston.
Welcome to you both.

Jane Eccleston: Glad to be here.

Andrew Templer: Thanks for having us.

Gillian Bradford: Jane, ASIC's recently released this discussion paper on the dynamic between public and private markets. So, why is it such a big one for ASIC?

Jane Eccleston: So, there's really two sides to this.
First, is there enough money to fund business growth to meet Australia's future economic needs and challenges?

I'm thinking about things like the energy transition, for instance.
It's going to take a lot of capital investment.
And second, are there investment opportunities to grow wealth?
So, I'm not just talking about someone who's got a bit of spare cash and wants to put it into the stock market, but I'm thinking about Australia's 4.1 trillion superannuation savings.

So, as a nation we have the 5th largest pot of retirement savings in the world.
That's a lot of money that needs investment.

Gillian Bradford: OK, so this is pretty fundamental to the whole economy.

Jane Eccleston: Absolutely.

Gillian Bradford: Andrew, spell it out for us exactly what we're talking about when we say the rise of private markets.

Andrew Templer: So, over the past decade, global private capital assets under management have tripled to 14.6 trillion U.S. dollars.
We're increasingly seeing private capital funds and superannuation behind some of the largest deals in Australian markets and this included Blackstone's acquisition of the unlisted Australian private company Air Trunk for $24 billion and the IFM consortium of super funds acquisition of the ASX listed Sydney airports for 23.6 billion Australian dollars.

Gillian Bradford: So, it's worth spelling out there that while AirTrunk was this massive $24 billion deal, it's the trend ASIC's looking at.

Andrew Templer: Yeah, so we're seeing some of these large deals in the private markets, whereas I think traditionally we would have seen more of these transactions accessing the public equity market to seek capital.

And so, we think with growing pools of capital in the private space, this is something that we would expect to see continue.

Gillian Bradford: And superannuation, Jane, is absolutely front of mind for ASIC on so many different levels and it's a pretty important factor why Australians need to care about this public private dynamic because one way or another, if we don't already, Australians are going to find they've got money moving between both markets.

Jane Eccleston: In terms of household wealth, superannuation is second only to the household in terms of everyday mums and dads, where their wealth actually is, a lot of it's in superannuation. So, increasingly seeing superannuation funds putting money either into private markets or alternatively investing overseas.

If you think about how superannuation funds are likely to invest in those private markets, there's some really good reasons why they would be doing that.
But with any of these investments, there's also risks as well.
It's a lot harder to value an asset if it's not traded publicly.

There's not a ready market, and instead it really comes down to whether there's a lot of discipline and governance about the way in which those assets are values.
And that is important because it flows through to people's superannuation balances.

Gillian Bradford: Okay, Andrew, I want to pick up on that with you.

So on this issue around transparency, so it's going to be important for ASIC as more and more people dive into the private markets either directly or indirectly through super that you understand what's going on.

Andrew Templer: Yeah. Well, private markets by their nature are opaque.
And so we look at this transparency issue from two different directions.
Firstly, transparency for investors, both retail and wholesale investors.
And have they got access to the information they need to make confident and informed investment decisions?

And secondly, for regulators, do they have access to the data they need to supervise activity in private markets and to monitor the impact of changes in markets?
And so data is essential to ASIC's work, and we've said in the our discussion paper that we need better recurrent data to more accurately assess risks in private markets.

Gillian Bradford: I know it's early days yet, but how have the private markets reacted so far for ASIC's call for more information on these deals?

Jane Eccleston: Look, you might think that they'd be against this but actually we've had a lot of positive feedback that recognising that as markets change, more is going to be needed in terms of transparency for regulators.

So, this is no means a ASIC against the industry.
We're really keen to talk to industry about what the way forward might be and what's something that would benefit Australia as a whole, but also might have some commercial benefits as well for the industry as well in terms of their transparency.

Gillian Bradford: Jane, I've heard Joe Longo talk about this, right as we stand here today, private markets aren't systematically important to the economy.
But as investors become more exposed, the risks more broadly increase.
And you've actually raised this question in the discussion paper. Could the next financial crisis come out of the private markets?

Jane Eccleston: So, I think that's a a question that we need to ask ourselves as a responsible regulator.
It doesn't mean that we think that private markets growing is necessarily a bad thing at all, but it does mean that we need to pause and just really reflect on what might be the consequences if we're not paying attention.

Gillian Bradford: Now, Andrew, just the fact that ASIC is talking about this issue, a lot of people might think they're about to turn the screws on private markets.
Is that the case?

Andrew Templer: Well, we have said in the discussion paper that as these markets grow, it's appropriate that we put more focus on supervising private market investments, including private capital funds.

And we're also interested in ideas to simplify markets regulation.
So, I think the initial response from industry has been expecting that we will look to tighten the screws, as you say, or increase regulation in this space.
But I'd also point to our Chair's remarks the end of last year and this year about our regulatory simplification programme.

And that's certainly a focus in this work too, whether we can both look at any need to intervene and areas where we can simplify law to improve the operation of our markets.

Gillian Bradford: Jane, are you imagining this is still going to be a big issue on ASIC's plate in five years time?

Jane Eccleston: In five years time, if we look at what has happened in other jurisdictions who are arguably ahead of us, there has been an incredible rise in terms of private markets, often at the expense of their public markets.
That has some benefits, but also some disadvantages, and one of them that I'd like to really highlight is that the public markets really serve a public good function.
They provide excellent means of getting transparency about valuations and all sorts of things, over and above just being a way in which companies can raise capital and investors can invest in companies.

Gillian Bradford: Because I can go to a document online, I can do the research on that company as a private investor, mum and dad investor, and I can see that information and make a decision.

And Australia traditionally has been a place where number of the proportion of Australians who directly hold investments in the ASX is very high compared to other places around the world.

So, we don't want to see the demise of our public markets.
But over the next five years, we will need to think about what is the regulatory approach we take given the rise of private markets and focus more of our attention in that sphere.

Gillian Bradford: Andrew and Jane, thank you both for joining us.
Terrific conversation, thank you.

Andrew Templer: Thank you.

Jane Eccleston: Thank you.

Gillian Bradford: Well, next up on Inside ASIC:
“Greenwashing matters, and it matters a lot because fundamentally it's a deception.

It's a deception that an institution or a company performs on another institution or a consumer by advertising a product that's supposedly climate or environmentally friendly when it's not in fact climate or environmentally friendly.

And so, if we think deception is wrong, then we ought to think greenwashing is wrong.”

Gillian Bradford: I'm Gillian Bradford, thanks for listening to Inside ASIC.
We'll pop a link to this ASIC discussion paper on public and private markets in our episode notes.

And don't forget, you can catch up with the latest episodes and all of last season wherever you get your podcasts.

Bye for now.

Gillian Bradford: Let's just say this plainly, lately a lot of super members have been let down pretty badly by their fund.

Media clips: “Grieving families and people with disabilities have been left waiting for $20 million of their insurance money by one of the country's biggest super funds.
These are the allegations levelled against..”
“All these people are going through grief and trauma and stress and they're playing with people's lives.”
“We have seen widowers with two children waiting 18 months for a decision on a death insurance claim.
“Waiting a year for a death benefit is just far too long.”

Gillian Bradford: It's been a sorry state of affairs and our corporate watchdog has been front and centre of the fight to try to bring this issue into the light and make sure funds are looking after their members.

Media clips: “Superfunds are on notice to lift their game.”
“Australia's corporate watchdog says it'll surveil super funds after it was revealed one fund failed to pay out death and disability benefits worth millions of dollars.”
“Superfund Cbus is being dragged to the Federal Court with ASIC claiming thousands of grieving families..”

Gillian Bradford: Hi, I'm Gillian Bradford and a big welcome back for the second season of Inside ASIC, the series pulling back the curtain on the forensic work Australia's corporate regulator is doing to keep businesses and consumers safe.
Well, at the end of last year, it was pretty difficult to ignore the storm that swirled around one of our big super funds, Cbus, after it delayed paying out $20 million in death or disability benefits to thousands of its members.
Since then, ASIC's also taken Australian Super to court, alleging similar delays, and of course, they're not the only funds members have had issues with.

We're going to talk to one of ASIC's senior leaders in just a bit about the important piece of work the commission's doing to drive better service for super customers.

But first, someone else living and breathing the issues members have with their super funds.

Xavier O’Halloran is the CEO of Super Consumers Australia.
Xavier, thanks for talking to us.

Xavier O’Halloran: Thanks for having me.

Gillian Bradford: Xavier, let's start with this issue around delays to death benefits, what were super members telling you about how they were being dealt with?

Xavier O’Halloran: So we have this kind of constant trickle and sometimes a flow of people coming to us saying “what is going on?”
Like I've spoken to my fund, I've called them like 16 times.
I feel like I'm the one basically processing this claim at the moment.
I'm having to follow up constantly, constantly being asked for more paperwork to fill in.
It's just stretched out in some cases, you know, years in order to get money that ultimately is theirs.

Gillian Bradford: So, it was pretty clear to you that this wasn't just a one off?

Xavier O’Halloran: Yeah, it was really clear.
Some of the leading indicators for us I guess, are seeing those AFCA complaints, so the complaints handling body for financial services in Australia.

And back in 22-23, we saw this explosion of complaints around death benefit in particular, something like 136% increase in complaints from the previous year.

So, we knew there were issues underlying this.
So, to be honest, we weren't surprised when we saw ASIC taking major enforcement action against one of Australia's biggest superannuation funds.

Gillian Bradford: And we do need to point out that case against Cbus is still before the courts.
But this this issue isn't just about one fund.

Xavier O’Halloran: No, it's not.
We've also seen Australian Super in trouble for similar things, with delays in some cases, people waiting four years to get a death benefit paid out.
Again, This is money that's owed to them.
They've had a loved one pass away, they may be financially reliant on that person as well, but they can't access their money.

To wait four years means people are giving up on things that they're going without, because these super funds are taking far too long.
And it's not even just the kind of delays process, which sometimes can be complicated.
It's even getting the form in order to make a claim, we've seen huge delays on that.
Some people waiting the best part of a year just to get the form off the Superfund so that they can make a death benefit claim.

Gillian Bradford: OK, So what is going on with super funds?

Xavier O’Halloran: Yeah, so there's a few different factors that have happened in recent years.
Firstly, superannuation's really grown massively obviously in the last few decades.

It's basically gone from a standing start for most people in the 90’s to a 4 trillion dollar system.
And so, a lot of the systems that originally at the super funds they might have outsourced because it was more efficient for them to do that. They're finding now that is causing major problems.

And when the rubber hits the road for a consumer, it's when they call up and they're kind of transferred through to some outsource company.

They have to explain their story every single time they call.

There's no in house accountability for the problems they're seeing.

Gillian Bradford: There's been a big focus on these payout delays, but I'm wondering what else is top of mind for you when it comes to the issues members are having?

Xavier O’Halloran: Yeah, We're seeing just poor customer service experience across the board.
So for example, the daughter of a gentleman contacted us last week who he's beyond the preservation age, so he's allowed to access his superannuation.
He put in a claim about a month before he needed it because he was purchasing a property.
He followed up with the fund every few days to say, hey, what's going on, what's going on?
He was getting closer and closer to settlement on the property and he was days out.
His daughter contacted us and was like, what's going on here?
The fact is there's no protections there for consumers, there's no actual standards set into law or regulation that says they have to pay that money out in a timely way.
There's just these kind of principled level protections, which ASIC, to their credit, are testing out right now.
So it'll be a really important case.

Gillian Bradford: But people shouldn't have to complain to get their own money out of super.

Xavier O’Halloran: Of course not, like it should be easy. It's what it's there for, right?
It's your retirement savings, like it's designed to be a pot of money that you can pay for all your cost of living expenses when you hit that retirement age.
And yeah, for many people, they're finding they're hitting that age and they're just stuck in limbo waiting for funds to pay out the money.

We really want people to obviously raise it with their fund first because that's the required process that you've got to go through.
If you're not satisfied with that, escalate it to AFCA, that's the complaints handling body.
It's a free service, it's set up for all Australians to access.
That really puts them on notice to fix the problem straight away, that usually a lot of cases will get solved, you know, in first instance, so within a kind of week or so, because it gets bounced straight back to the fund and the fund goes “uh oh, someone's watching, we've got to do something here.”

And then a handful of cases will escalate from there and AFCA may have to take further action in order to get a resolution.
But putting the funds on notice via AFCA is a really good first step for people once they've been frustrated by the fund's own response.

Gillian Bradford: Xavier, with all of these issues swirling around super, how important is ASIC's involvement, whether it's this pretty intensive reporting on the fund's performance or their enforcement action?

Xavier O’Halloran: Yeah, it's hugely important.
Like when ASIC took that enforcement action against Cbus, that was really I think a watershed moment for a lot of funds.
There was huge attention on the story as well.
And what we heard from many funds is a lot of them were saying, “OK, we realise this is a problem now.:

Really they should have realised years ago when it was starting to escalate in complaints to AFCA.

And some have started to insource some of their customer service functions.
But more importantly, I would say, is the government took notice as well and they announced that they were going to introduce mandatory customer service standards so that we could start to see some time frames and some obligations on super funds about how they treat customers.

Gillian Bradford: Xavier Halloran, thank you.

Xavier O’Halloran: Thanks for having me.

Gillian Bradford: Well next up, a deep dive on super with one of ASIC's senior leaders.

And I'm very glad to be joined now by Pippa Lane, who's the Senior Executive Leader, Superannuation and Life Insurance at ASIC.

Pippa, thanks so much for talking to us.

Pippa Lane: Thanks for having me.

Gillian Bradford: Pippa, we just got a taste from Xavier O’Halloran about some of the really bad service super members have received, particularly when it comes to claiming death benefits.
And ASIC's now released a really important report about what went so wrong, and we'll link to that in our episode notes, because it does make for pretty startling reading.
But tell us about some of your main findings.

Pippa Lane: Yeah, so this has been a really large, detailed study.
I'd say this is unusual for us to go into this much depth, but we did so because it was such an important issue.
So, we looked at the policies and procedures of trustees.
We met with them multiple times, we got specific data on claims handling times, we asked them about uplift, we also reviewed claims files and recordings.
So, we did all of those things because this was such an important issue and piece of work.

Gillian Bradford: Tell us about that, when you say you reviewed claims files and recording, what sort of forensic work does that actually take for ASIC?

Pippa Lane: Yeah, so we looked at 100 files, which was 10 from each of the trustees and we looked through there to understand what happened in that particular case and followed that through in detail.
A really interesting finding is that 78% of the delays that we found with the things that were in the trustees control, in most of the cases there was something that the trustee could have done to prevent that delay.

Gillian Bradford: And you're actually listening to customers calls with their insurance provider and the history of those calls. What's that like for ASIC?

Pippa Lane: Yeah, so some of them were very sad because you're dealing with such a sensitive issue here. People who've lost a loved one need that money, you know, potentially to pay their rent or their home loan.
You know, their breadwinner has passed away and they're struggling there to get the right service from the superannuation trustee.
So ahead of that phase of the work, we actually sent the team on some training on how to deal with the emotional kind of fall out of spending a long time kind of listening to those calls and reading through those files.

Gillian Bradford: And Pippa, is it fair to say this is a long and detailed piece of work from ASIC and along the way you have shared your early findings with the industry because you want them to do better. You don't want this to end up in the courts.

Pippa Lane: That's right. So you know, as we, as we started on this work and realised that there were such significant problems, we wrote to the chief executives of trustees in November 2024 and that outlined those early findings of ours and really looked to set some guidance to trustees saying you need to prioritise this now. Don't wait till we finish this review; it's going to take us a while to get through all this material. We want you to take action now.
So Commissioner Constant wrote to the chief executives and said please table this with your boards, please take urgent action now.

Gillian Bradford: Now, the end game here for ASIC is actually making things better for customers, and this report is pretty clear about what needs to be done to fix this.

Pippa Lane: That's right. So there's, you know, there's a number of things that trustees need to do. One of those is, is really for trustee boards to step up.
And a really striking finding was that trustees weren't capturing information on how long claims were taking from the start, which we counted as when the claimant first contacted the trustee.
You look at it and you see that detail, you see how frustrating it is for people.
You see, you know, the callous way some people have been treated.
And we think that executives and boards should - we know it's not realistic for them to look at every single complaint, but we think that they should listen in to some of those files.
They should look at some of those files.

Gillian Bradford: And Pippa, your work isn't done on monitoring the performance of funds.
What else have you got an eye on?

Pippa Lane: Yeah, so a number of things.
And I should also say we will come back to death benefits again to check that that uplift is actually happening.
Another one that I wanted to mention was scams, because we recently finished a piece of work on scams and I feel like it had some of the same themes actually as the death benefits work in that none of the trustees had an anti-scam strategy and they weren't collecting information on scams.

There was an attitude that this was really up to the banks, that the banks are in charge of anti-scams but anti-scam activity belongs to everyone.
And Simone Constant, our Commissioner who has responsibility for superannuation, said it's not often that you get to stop a car crash before it happens.

As more Australians reach our preservation age and are able to access their super, we know that scammers are going to be targeting them more and more.
So, it was really concerning to say trustees not having scam strategies and not reporting to their boards on potential scam activity.
So that's another area where we think there's uplift that's needed.

Gillian Bradford: Pippa Lane, thank you so much.

Pippa Lane: Thanks so much for having me.

Gillian Bradford: Next up on Inside ASIC.

So, have Australia's public markets become over regulated? What are you hearing from company directors about this?

Yeah, so I think that's a bit of a conundrum.
When I talk to company directors or people in the investment markets, they say the ASX is overburdened with governance and disclosure obligations.
But none of that has changed in the last two years.

Gillian Bradford: I'm Gillian Bradford, thanks for listening to Inside ASIC.

Don't forget, you can catch up with the latest episodes and all of last season wherever you get your podcasts.
Bye for now.