Let us finger the real managerial culprits says ASIC
The Australian Securities and Investments Commission (ASIC) has signalled it wants the ability to dig through the layers of management hierarchy to ensure it bans those ultimately responsible for regulatory breaches.
The regulator has told a Parliamentary Joint Committee that giving it the ability to ban managers will prove ineffective if cannot not reach out and finger the right people.
“It is crucial to the effectiveness of such a banning power that the trigger for banning people from management is appropriate,” ASIC said. “It will not be effective if ASIC can only ban those that themselves have directly committed breaches of the law.”
Providing an answer to a question on notice from the committee, ASIC said the role of managers should be to take reasonable steps to ensure compliance with the law by the people they are managing.
“ASIC needs to be able to remove managers who seriously fail that standard and whose management failings have contributed to misconduct in a firm and thus losses to consumers,” it said.
The regulator told the parliamentary committee that, currently, ASIC's financial services banning powers do not allow for all poor conduct to be subject to banning action.
“At the moment, ASIC can only ban people from directly providing the services, not from managing that process,” it said. “That may assist with dealing with bad apples, but it does not tackle problems with the tree.”
“This means that ASIC has little ability to control those who actually control the compliance culture and make the significant decisions of a licensee. This could include directors and officers, or compliance managers in larger organisations.”
Recommended for you
A financial advice firm has been penalised $11 million in the Federal Court for providing ‘cookie cutter advice’ to its clients and breaching conflicted remuneration rules.
Insignia Financial has experienced total quarterly net outflows of $1.8 billion as a result of client rebalancing, while its multi-asset flows halved from the prior quarter.
Prime Financial is looking to shed its “sleeping giant” reputation with larger M&A transactions going forward, having agreed to acquire research firm Lincoln Indicators.
An affiliate of Pinnacle Investment Management has expanded its reach with a London office as the fund manager seeks to grow its overseas distribution into the UK and Europe.
