FSCP by numbers: What action is the panel taking?
Money Management explores which actions the Financial Services and Credit Panel (FSCP) is taking when it considers the outcomes of cases.
Last week, Money Management delved into which issues and breaches of the code of ethics and Corporations Act were occurring the most in the first 16 cases investigated by the panel. This found superannuation and statements of advice were particularly common.
The FSCP is a pool of industry participants, appointed by the responsible minister, that ASIC draws upon when forming individual sitting panels. It operates separately from, but alongside, ASIC’s existing administrative decision-making processes.
A sitting panel will be convened by ASIC to consider certain suspected misconduct by, or circumstances relating to, a financial adviser such as if it reasonably believes a financial adviser is not a fit and proper person to provide advice or a financial adviser becomes insolvent under administration and ASIC is aware of this.
ASIC said the possible actions that can be taken include warning/reprimand, directions and orders, such as to undertake training or supervision, and suspending or prohibiting an advisers’ registration. It can also make a recommendation to ASIC to issue civil penalty proceedings or accept an enforceable undertaking.
Looking at what actions are occurring as a result of the breaches, the most popular form in the 16 cases since the introduction of the panel is for an independent audit followed by pre-vetting of the advisers’ next 10 statements of advice.
In three instances, no action was taken by the panel.
Actions taken:
| Action | Instances |
| Independent audit | 7 |
| Pre-vet advice SOAs | 6 |
| Supervision | 6 |
| Reprimand | 3 |
| N/A | 3 |
| Registration change | 2 |
Commenting, Lee Forde, financial adviser at Forde Financial Planning, said the actions are too lenient on the offending adviser.
“Auditing the next 10 files won’t solve the problem; it won’t uncover systemic issues at those firms. What is needed is extra training. They should have to sit the FASEA exam again because they clearly haven’t learnt the lessons in the exam, and there are still poor practices operating.
“Some of them are basic breaches, but there is no real consequence or deterrent in place.”
Both Forde and Fourth Line chief executive Joel Ronchi agreed the decision should also publish more information, similar to the ones published by the Australian Financial Complaints Authority (AFCA). These are often multiple pages long in comparison to the FSCP ones, which can be just a few paragraphs.
Ronchi said: “I would like to see more details in the outcomes. We are all used to the AFCA ones, so that is what everyone had expected from the FSCP, but that hasn’t been the case.”
Forde said: “The devil is in the detail and some of the outcomes are very ambiguous. If we had more detail about the reason for the action, then we would be able to learn from their mistakes.”
AUTHOR
Laura Dew
Recommended for you
Sequoia Financial Group has declined by five financial advisers in the past week, four of whom have opened up a new AFSL, according to Wealth Data.
Insignia Financial chief executive Scott Hartley has detailed whether the firm will be selecting an exclusive bidder for the second phase of due diligence as it awaits revised bids from three private equity players.
Insignia Financial has reported a statutory net loss after tax of $17 million in its first half results, although the firm has noted cost optimisation means this is an improvement from a $50 million loss last year.
With alternative funds being described as “impossible” for fund managers to target towards advisers without the support of BDMs for education, Money Management explores the evolving nature of the distribution role.
