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ASIC prepares for FSCP rollout

ASIC adviser enforcement

ASIC has started preparations for its new adviser enforcement panel, but will not release guidance on its operation until early next year.

The Australian Securities and Investments Commission (ASIC) has started work on the creation of the panel that will oversee adviser enforcement, but has yet to release guidance on its operation and the exercise of its powers.

ASIC stated that under the Financial Sector Reform (Hayne Royal Commission Response –Better Advice) Act 2021, the Financial Services and Credit Panel (FSCP) will be given its own statutory functions and powers from 1 January 2022.

These powers include directing financial advisers to undertake training, counselling or supervision and to report certain matters to ASIC.

The FSCP will also be able to suspend or cancel a financial adviser’s registration, issue infringement notices in specified circumstances, recommend ASIC commence civil penalty proceedings and enter into enforceable undertakings with financial advisers.

While not providing further details on its current actions, ASIC stated it “will consult on guidance regarding the operation of the FSCP in early 2022”.

“We will also release guidance about how ASIC will exercise its new power to issue warnings/reprimands in early 2022,” the corporate regulator said.

It stated the FSCP will convene from 1 January under circumstances prescribed in the Financial Sector Reform Amendment (Hayne Royal Commission Response – Better Advice) Regulations 2021, which were made on 20 December 2021.

“For instance, ASIC must convene an FSCP where it reasonably believes that a financial adviser is not a fit and proper person to provide advice or a financial adviser becomes an insolvent under administration and ASIC is aware of this,” it said.

“ASIC will proceed to issue a warning/reprimand or make a referral to an FSCP only where it has formed the reasonable belief after carrying out its usual triaging, investigatory work and referral processes.

“This means that not all concerns about the conduct of financial advisers that come to ASIC’s attention will result in ASIC issuing a warning/reprimand or a referral to an FSCP.”

It noted a panel of external delegates, which also carried the FSCP title, set up in 2017 to make administrative decisions on financial services and credit matters was wrapped up on 1 July 2021 in anticipation of the reforms in the act.

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