We have the power to obtain documents says ASIC
The Australian Securities and Investments Commission (ASIC) has used recent Federal Court decisions, including one against IOOF’s RI Advice, to reinforce the manner in which it has a right to access documents held by companies.
In doing so, ASIC said it had information gathering powers and that it would take steps to enforce those powers.
The regulator cited recent Federal Court decisions with respect to legal privilege claimed by RI Advice and Maxi EFX which had both cited legal privilege in refusing to hand over documents to ASIC.
It said RI Advice had claimed privilege over an internal report prepared at the direction of an in-house lawyer for the purposes of the lawyer giving legal advice, although the company had previously produced copies of the report in response to notices issued by ASIC.
The documentation relates to civil penalty proceedings against RI Advice and its former authorised representative, John Doyle, in which it is alleged that RI advice failed to take reasonable steps to ensure Doyle provided appropriate advice and applied client best interest.
Justice O’Callaghan found that RI Advice’s evidence was inadequate to establish that the report was privileged, emphasising that “[no] explanation has been given…why RI’s current CEO, who was closely involved in the process that led to the creation of the Third File Review” did not give evidence.
His Honour found that, even if the report had been privileged, RI Advice would have waived its privilege by previously producing copies to ASIC without objection.
ASIC noted that his Honour dismissed an argument that an email sent by RI Advice when it first produced the report was binding on ASIC. In the email, RI Advice said it was producing the document on a confidential basis, and “consistent with … legal professional privilege”. His Honour accepted ASIC’s submission that RI Advice had “apparently decided to attempt to bypass” the step of obtaining ASIC’s formal agreement to accept the document on a privileged basis by following the process identified in ASIC’s notice to RI Advice.
ASIC said it believed the Federal Court decisions had clarified the obligations imposed on those upon whom it served notices requiring them to produce documents.
Recommended for you
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
Compliance professionals working in financial services are facing burnout risk as higher workloads, coupled with the ever-changing regulation, place notable strain on staff.
