ASIC only allowed to ban advisers under new disciplinary regime
Financial advisers who breach obligations under the Corporations Act 2001 where the Australian Securities and Investments Commission (ASIC) believes banning is not appropriate will be subject to the Government’s proposed single disciplinary body, the Financial Services and Credit Panel (FSCP).
The new regime’s exposure draft legislation said the FSCP would consider ASIC’s evidence and decide whether to impose an administrative sanction, infringement notice, both, or no action.
The panel would consist of at least two industry representatives and an ASIC staff member as chair.
The minister of the day would determine the people eligible to be appointed to an FSCP. A person, it said, needed experience or knowledge in at least one of the fields: business, company administration, financial markets, financial products and services, law, economics, accounting or taxation.
When ASIC convened an FSCP, ASIC must appoint at least two members from this pool. An ASIC officer would be the chair of each FSCP.
Financial planners, financial advisers, and tax financial advisers who were authorised to provide personal advice to retail clients would be subject to the FSCP. People only providing general advice would not be subject to the panel.
Stockbrokers, actuaries, and insurers were all subject to disciplinary action by the FSCP if they were giving personal advice to retail clients.
“An Australian financial services (AFS) licence holder will only be subject to the FSCP where it is also a relevant provider and the breach relates to that person’s conduct as a financial planner or adviser. Otherwise, breaches by a licensee will continue to be dealt with by ASIC,” it said.
“The FSCP can impose a range of administrative sanctions, an infringement notice or recommend that ASIC commence court proceedings seeking a civil penalty.
“The administrative sanctions that the FSCP can apply are a warning or reprimand, directions to the adviser to undertake additional training or supervision, or suspending or cancelling the adviser’s registration for a specified period.”
The FSCP would also be able to improve an infringement notice in specific breaches carved out as Restricted Civil Penalty Provisions (RCPPs). These breaches included:
- Not meeting the education and training standards;
- Not complying with the code of the ethics;
- Not meeting the requirements for supervising a provisional relevant providers;
- Not following a direction or order given by the Financial Services and Credit Panel; and
- Giving financial advice while unregistered.
Currently, an infringement notice amount for an alleged contravention of a RCPP was 12 penalty units for a single contravention, which was $2,664.
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