ASIC claims its tough adviser enforcement builds consumer confidence
Consumers are more likely to trust financial advisers if they know that the regulator is ready to enforce the law and hold those advisers to account, according to the Australian Securities and Investments Commission (ASIC).
Asked whether its approach was too punitive and whether the regulatory framework was focused on prosecuting wrongdoers rather than encouraging and supporting good outcomes for consumers, ASIC chose to defend its approach even though it acknowledged there was a concerning lack of access to affordable quality advice.
Answering questions on notice from NSW Liberal backbencher, Jason Falinski, ASIC claimed it was working constructively with Government and the advice industry to enable access to affordable quality advice for Australian consumers.
“We recognise that a lack of access to affordable, quality financial advice is a concern,” it said. “This is why we are currently undertaking a project on unmet advice needs, which will look at what impediments industry is facing in providing affordable and limited advice to consumers.”
“The project aims to identify what steps industry and/or ASIC can take to overcome these impediments. We also believe that consumers are better able to rely on and trust the financial advice industry if they see a regulator that consistently enforces the law and ensures that advisers are held accountable for their obligations and uphold their professional standards,” ASIC said.
It said the Financial Services Royal Commission had “highlighted the substantial harms that misconduct in the financial services sector can inflict on consumers and investors”.
“Such harms can have the effect of depressing consumer confidence and undermine trust in the sector. ASIC recognises our role in driving behaviours that will restore trust and confidence.”
“We remain committed to our ‘Why not litigate?’ approach. This means that in considering whether enforcement action is appropriate, we will actively ask ourselves why we would not progress a given matter through to court-based enforcement action,” the regulator said.
“It does not mean that we will seek to litigate every matter as a default option. When considering enforcement action, including administrative action, we will continue to consider a range of public interest factors, including our strategic priorities and whether the conduct is egregious or harms vulnerable consumers.”
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