The Australian Securities and Investments Commission (ASIC) has released guidance as to when it will issue a warning to a financial adviser and what that means for those who receive one in comparison to further reviews or take enforcement action.
The regulator outlined the circumstances under which it would issue a warning in Information Sheet 270 Warnings and Reprimands which it released today under requirements contained in the Financial Sector Reform (Hayne Royal Commission Response – Better Advice) Act 2021.
The information sheet states a warning or reprimand will be issued to an adviser where there has been a contravention of financial services law that ASIC does not consider serious, a refusal or failure to implement an Australian Financial Complaints Authority determination, non-compliance with an order made by the Tax Practitioners Board, or if the officer of a corporation is unable to pay their debts.
“Generally, a warning will warn a financial adviser against continuing the conduct or circumstances that led to us giving the warning, whereas a reprimand will admonish the financial adviser in relation to the conduct or circumstances that have already ceased,” the regulator said.
Advisers will receive a letter containing a statement of reasons for ASIC’s decision to give the warning or reprimand, and “the procedural requirements we follow are the same for warnings and reprimands”.
“For example, in both cases we must provide a copy of the warning or reprimand to the financial adviser’s Australian financial services (AFS) licensee(s), and provide a statement of reasons,” the regulator noted.
“ASIC’s obligation to notify the financial adviser’s current authorising AFS licensee(s) applies regardless of whether the circumstances occurred during the course of the financial adviser’s authorisation with that licensee.
“If the financial adviser is authorised by more than one AFS licensee at the time ASIC decides to give a warning or reprimand, we must give a copy to each AFS licensee.”
The corporate watchdog added it will only issue a warning or reprimand for conduct engaged in, or circumstances arising, on or after 1 January 2022 and that warnings and reprimands will not be recorded on the Financial Advisers Register or published by ASIC, but will be publically reported.
