Fix the System
The Senate Inquiry into Sterling First exposed how the Australian Securities and Investments Commission (ASIC) allowed Sterling directors, with a history of ripping off investors in failed financial schemes, to prey on vulnerable elderly Australians.
The political attention on Sterling First has not come too soon. Of the 140 or so elderly victims who collectively lost $18 million when Sterling First collapsed in 2019, 16 have passed away, some have been evicted, and the remainder live every day with the fear of imminent eviction hanging over their heads. On 7 October, ABC 7.30 reported on their plight in a segment called “Left in Limbo”, which featured great-grandparents Lou and Laurie Thomas, who lost a Supreme Court case in June and were recently evicted. “There was lots of tears, lots of sleepless nights”, Lou said to 7.30. Laurie added: “Lots of me waking up in the middle of the night, hearing her crying.”
7.30 profiled other victims facing eviction, including Alex Tufekcic and his wife Leonie Yates, who are facing an upcoming Supreme Court case which could see them evicted. “Well, I don’t want to think about that, because it’s horrible. We’ll be out on the street”, Alex said. “It’s humiliating”, Leonie despaired. “At this age, to be in a situation where you’re facing something like this.”
No more buck-passing
The most important part of the ABC 7.30 report was the emphasis on the need for a Senate inquiry into Sterling, including into ASIC’s failings. ASIC is the corporate regulator which is supposed to ensure consumers are fully informed, but in the case of Sterling, ASIC:
These failings are the responsibility of ASIC, and of the government which has deliberately kept ASIC weak and ineffective as a regulator. However, ASIC is denying responsibility, and is trying to pass the buck to other agencies, which are also passing the buck. The ABC 7.30 website has posted statements from ASIC, the Australian Financial Complaints Authority (AFCA), Financial Services Minister Jane Hume, and the WA state government, all effectively denying responsibility and passing the buck to each other. Yet while the bureaucrats are buck-passing, the elderly victims are living the nightmare of not knowing when they might be thrown onto the streets, and even dying. All Australians should find this unacceptable, including for the reason that such a failed system could victimise any of us at any time, including you and your loved ones. Australia is supposed to be a nation that believes in the rule of law and justice; we must demand it in this case. Labor Senator Louise Pratt said to 7.30: “ASIC might claim that they haven’t failed. However, you only need to look at the evidence to the contrary. We have seen vulnerable consumers lose hundreds of thousands of dollars and it’s all very well for ASIC to intervene now, when it should have intervened before these people lost their money.”
The elderly victims of the Sterling First scandal, robbed of their life savings by serial Ponzi schemers while the regulator, the Australian Securities and Investments Commission (ASIC), simply looked on and let it happen, are not an anomaly. The 10,000 submissions received by the 2018 Banking Royal Commission, and the 70,000 complaints received annually by the Australian Financial Complaints Authority (AFCA), demonstrate that the fundamental structure of Australia’s financial system has enabled decades of financial predation and institutional highway robbery, and it must be changed, if not by the politicians from the top down, then by the people from the ground up.
A Senate inquiry into Sterling First is imperative, as the scandal is living proof of ASIC’s ongoing regulatory negligence and the fact that, two and a half years after the Banking Royal Commission, nothing has materially changed. We must fix the system. The systemic failings of Australia’s regulators leave all of the public vulnerable to being financial “cannon fodder” for the corrupt financial system.
The political attention on Sterling First has not come too soon. Of the 140 or so elderly victims who collectively lost $18 million when Sterling First collapsed in 2019, 16 have passed away, some have been evicted, and the remainder live every day with the fear of imminent eviction hanging over their heads. On 7 October, ABC 7.30 reported on their plight in a segment called “Left in Limbo”, which featured great-grandparents Lou and Laurie Thomas, who lost a Supreme Court case in June and were recently evicted. “There was lots of tears, lots of sleepless nights”, Lou said to 7.30. Laurie added: “Lots of me waking up in the middle of the night, hearing her crying.”
7.30 profiled other victims facing eviction, including Alex Tufekcic and his wife Leonie Yates, who are facing an upcoming Supreme Court case which could see them evicted. “Well, I don’t want to think about that, because it’s horrible. We’ll be out on the street”, Alex said. “It’s humiliating”, Leonie despaired. “At this age, to be in a situation where you’re facing something like this.”
No more buck-passing
The most important part of the ABC 7.30 report was the emphasis on the need for a Senate inquiry into Sterling, including into ASIC’s failings. ASIC is the corporate regulator which is supposed to ensure consumers are fully informed, but in the case of Sterling, ASIC:
- knew the directors had a history of financial failures;
- knew they were targeting elderly people;
- failed to warn Sterling customers who asked ASIC if there were any red flags about the company;
- failed to act on complaints about Sterling until too late; and
- when ASIC did eventually act on Sterling, it failed to stop the directors from starting another structure called Silverlink to suck in another $11 million from more tenants ($6.8 million was extracted before ASIC’s stop order, then Silverlink extracted $11 million more).
These failings are the responsibility of ASIC, and of the government which has deliberately kept ASIC weak and ineffective as a regulator. However, ASIC is denying responsibility, and is trying to pass the buck to other agencies, which are also passing the buck. The ABC 7.30 website has posted statements from ASIC, the Australian Financial Complaints Authority (AFCA), Financial Services Minister Jane Hume, and the WA state government, all effectively denying responsibility and passing the buck to each other. Yet while the bureaucrats are buck-passing, the elderly victims are living the nightmare of not knowing when they might be thrown onto the streets, and even dying. All Australians should find this unacceptable, including for the reason that such a failed system could victimise any of us at any time, including you and your loved ones. Australia is supposed to be a nation that believes in the rule of law and justice; we must demand it in this case. Labor Senator Louise Pratt said to 7.30: “ASIC might claim that they haven’t failed. However, you only need to look at the evidence to the contrary. We have seen vulnerable consumers lose hundreds of thousands of dollars and it’s all very well for ASIC to intervene now, when it should have intervened before these people lost their money.”
The elderly victims of the Sterling First scandal, robbed of their life savings by serial Ponzi schemers while the regulator, the Australian Securities and Investments Commission (ASIC), simply looked on and let it happen, are not an anomaly. The 10,000 submissions received by the 2018 Banking Royal Commission, and the 70,000 complaints received annually by the Australian Financial Complaints Authority (AFCA), demonstrate that the fundamental structure of Australia’s financial system has enabled decades of financial predation and institutional highway robbery, and it must be changed, if not by the politicians from the top down, then by the people from the ground up.
A Senate inquiry into Sterling First is imperative, as the scandal is living proof of ASIC’s ongoing regulatory negligence and the fact that, two and a half years after the Banking Royal Commission, nothing has materially changed. We must fix the system. The systemic failings of Australia’s regulators leave all of the public vulnerable to being financial “cannon fodder” for the corrupt financial system.