Disciplinary panels may address ASIC concerns

asic disciplinary panels

ASIC’s adviser-led disciplinary panels may be called upon to review trends in bad advice and provide input into deterrent measures.

The adviser oversight and disciplinary panels created by the Australian Securities and Investments Commission (ASIC) should be able to meet to address issues that would create a regulatory benefit even where no specific problems may be evident, the regulator has proposed.

The regulator made the suggestion in Consultation Paper (CP) 359, which is seeking industry feedback on changes to Regulatory Guide 263, which governs the operation of the Financial Services and Credit Panel (FSCP) and which has been drawn from a number of financial advice practitioners.

ASIC noted that under the ASIC Act it has broad discretionary powers to convene a sitting panel to consider misconduct by financial advisers and must do so under specific circumstances.

These include when an adviser is convicted of fraud, ASIC believes they are not a fit and proper person, they have contravened the education and training requirements of the Corporations Act or breached financial services laws and the regulator has not already exercised its banning and disciplinary powers.

CP 359, however, proposes the FSCP also be able to meet to address issues that would provide a regulatory benefit to investors and consumers without any convening circumstances being present.

“In determining whether ASIC will convene a sitting panel using this power, we propose to consider the regulatory benefit that may be derived from referring a matter to a sitting panel—for example, whether misconduct is widespread or part of a growing trend and whether referring the matter to a sitting panel will send an effective and deterrent message to industry,” ASIC stated in CP 359.

The paper also indicated ASIC wanted the oversight and disciplinary panels to convene if there was material loss or damage to a client or a material benefit to an adviser because the practitioner’s actions were beyond those normally expected.

The regulator said it could only convene a sitting panel where it believed the convening circumstances were serious and material loss and benefits were considered as such under ASIC regulations.

It also indicated it was seeking to publicise the decisions of a sitting panel, via media releases, but would only do so dependent on the outcomes of a panel’s decisions.

“We propose that ASIC’s general approach will be to publish a media release about actions taken by a sitting panel,” it said.

“However, we propose to only publicise names of financial advisers affected by decisions of a sitting panel in those media releases, if the sitting panel’s decision must be displayed on the Financial Advisers Register.

Feedback on CP 359 will close on 28 March and any industry feedback should be directed to ASIC.

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