The Government should scrap ASIC and start over again. Even describing the body as a corporate regulator is stretching it, as the truth is it hasn't regulated anything for years, writes Ian Verrender.

The timing, as Sir Humphrey would say, was unfortunate.

Less than a week after the Federal Government unwound some of the protections for consumers seeking financial advice from planners, a Senate committee called for a Royal Commission into white collar crime.

There are only two chances of a Royal Commission; none and Buckley's.

But if the Government truly wants to save face after caving in to the banks and watering down the Future of Financial Advice legislation, there is a way.

It should immediately disband the Australian Securities and Investments Commission and start all over again.

The allegations of fraud and deception on a grand scale among the Commonwealth Bank's financial planning divisions stunned investors.

But the great triumph of the committee's work was that finally, the ineptitude and incompetence of our corporate regulator now is on display for all to see.

Even describing ASIC as a regulator is stretching things. The truth is, it hasn't regulated anything for years.

It's very good at fleecing anyone wanting to extract some information from its databases, where it charges the equivalent of the GDP of a small African nation just to conduct rudimentary searches.

It prides itself on running courses in schools educating the kiddies on how to manage their financial affairs. And it spends an inordinate amount of time running campaigns on its website against reporters who criticise it. (Fairfax's Adele Ferguson, whose work sparked the inquiry, attracts the most heat.)

But when it comes to enforcing the Corporations Act, well let's not even go there. On the other hand, let's.

First up, it is instructive to provide some context into the Senate committee's deliberations.

Around the time that ASIC didn't act on the evidence provided by whistleblower Jeff Morris, a former CBA financial planner, it was busy fending off complaints of conflicts of interest from within.

In 2005, corporate lawyer James Wheeldon discovered to his horror that the financial planning industry - which is dominated by the big banks - was helping to direct ASIC policy via financial services industry executives seconded to the regulator.

Wheeldon gave evidence to the inquiry that the financial services industry was receiving favourable treatment by shortcutting its way through the system.

Not only were his complaints ignored; instead, both he and the organisation agreed he should seek employment elsewhere.

Think about those two events. ASIC ignored the plight of small investors. But it pandered to the vested interests of the banking industry.

ASIC chairman Greg Medcraft is the man taking the heat right now. To be fair, he is but the latest in a long line of commissioners who have let the Australian public down. He claims that ASIC is under-resourced. But the problem is not cash. It is culture.

When it comes to enforcing the law, the predominant ethos appears to be: "Smaller fish to fry."

Consider the contrasting approach to these two cases.

Whitehaven Coal. Green protester Jonathan Moylan is facing jail time in a fortnight after pleading guilty to disseminating false and misleading information about the company's financing arrangements.

His fake press release temporarily sent Whitehaven's shares tumbling and ASIC pursued him to the full extent of the law.

Around the same time, Australia's biggest goldminer, Newcrest Mining, began selectively briefing analysts about a multi-billion-dollar writedown of its operations. For almost a week, shareholders were operating in an information vacuum as the share price tanked.

Was anyone charged? ASIC conducted an investigation, made the company promise to never do it again and fined it $1.2 million.

But it wasn't executives or directors who footed the bill. It was shareholders, the ones who were dudded in the first place, who coughed up.

Those same shareholders now are being forced to run a class action against the very company in which they've invested for restitution.

This has become ASIC's modus operandi. It has abrogated its responsibility to public company shareholders, effectively outsourcing litigation, and actively encouraging shareholders to proceed with class actions.

The message is, if you've lost money through corporate malfeasance, you're on your own.

Given its appalling track record in court, perhaps it is for the best. Who could forget the nearly decade-long debacle that was the One.Tel case? The trial judge reserved his harshest criticism for ASIC.

There was the embarrassment of its case against Telstra, where it simply banned alleged comedian Steve Vizard as a director and fined him $390,000 after he admitted to using confidential information to trade shares.

But its performance in the aftermath of the financial crisis that bears special mention. Apart from Melbourne based property group Centro - the first company to collapse when the crisis hit - it simply didn't bother pursuing any other major group.

Not all collapses are the result of misdeeds. Incompetence and simple bad luck often play a larger role.

But on numerous occasions, receivers and liquidators stood up in court during public examinations of executives and directors of failed companies and exhorted the regulator to pursue what they believed were flagrant breaches of the Corporations Act. Nothing happened.

Fast Eddy Groves, the Gold Coast based head of what once was Australia's biggest child care group ABC Learning, was in ASIC's firing line for a while. But the whole thing got too hard and ASIC simply gave up.

It gets worse. As a law enforcement agency, in another case it even went to the extent of not only not charging anyone with serious offences, but writing letters to those who found themselves the subject of complaints, to assure them they would not face action.

Could you imagine a police commissioner engaging in such a practice?

One such letter, which is in the possession of your columnist, begins by explaining that ASIC intends to take no action against allegations of criminal conduct. It ends with a warning that "should evidence of further breaches" come to light, it may re-open the case.

Further breaches. That sounds like an acknowledgement that it was convinced the evidence in its possession constituted a breach of the law.

By the way, that evidence was provided by the company's own auditors in three separate letters over nine months with forensic detail of round robin transactions and questionable asset sales. ASIC did nothing for three years. Not even a phone call to the auditors.

It finally got around to a quick examination of the matter in 2012 before issuing that letter.

That's our corporate regulator at work.

Ian Verrender is the ABC's business editor. View his full profile here.