Explosive claims by a former lawyer with the Australian Securities and Investments Commission that the organisation was in the pocket of finance industry lobbyists have sent the corporate regulator into damage control.

James Wheeldon, who worked as an ASIC solicitor almost a decade ago, has broken a silence that was induced by a legal settlement with his former employer, accusing the organisation of caving in to lobbying by the big banks and the financial services industry during his time there.

Wheeldon left ASIC after lodging complaints to his superiors that he believed the organisation had failed to comply with its own standards and policies when it issued an exemption to the industry over the use of online calculators that would allow customers to tally their potential future superannuation earnings.

According to Wheeldon, the changes had the effect of allowing the industry to skirt its responsibility to act in the client's interest, as fees and charges were not necessarily included in the calculations.

The exemptions were issued at a sensitive time. Like the current debate over the Future of Financial Advice (FoFA), legislative changes known as Super Choice had just been introduced to allow consumers to more easily swap superannuation funds.

Retail superannuation funds, mostly run by the banking industry, until that time had performed poorly, even during boom years, when compared with industry funds run by unions and employers.

It is generally agreed that the primary factor in the performance differential was the fees charged by retail funds.

Wheeldon says he was also incensed that he was forced to report to a lawyer who had been seconded to ASIC from MLC - the financial services arm of the National Australia Bank - who had been involved in lobbying for the changes and had declared a conflict of interest to ASIC.

Wheeldon launched legal action against the regulator on his departure which resulted in ASIC making a cash settlement and Wheeldon signing a confidentiality agreement, an agreement the lawyer now argues has been broken by ASIC in its claims before a Senate Inquiry.

After dismissing the claims made by Wheeldon in a submission to the Senate on Wednesday, and which appeared in Fairfax Media, the regulator initially refused to formally respond, arguing that it would answer the allegations on April 10 in its own submission.

However, after learning that ABC's The Business had secured an exclusive interview with Wheeldon, ASIC deputy chair Peter Kell last night appeared on the program to respond to the claims.

Kell argued that ASIC had the power to provide exemptions to the law, that it has followed its procedures to the letter and that the exemptions applied to all superannuation industry participants, not just those run by the major banks.

Sorry, this video has expired Extended interview with Peter Kell ( Ticky Fullerton )

Edited versions of both interviews, conducted by Ticky Fullerton, aired on The Business on Thursday night.