The Australian Securities and Investment Commission (ASIC) will gain sweeping powers to ban advisers under CLERP 6 draft legislation, according to an industry lawyer.
The Australian Securities and Investment Commission (ASIC) will gain sweeping powers to ban advisers under CLERP 6 draft legislation, according to an industry lawyer.
Minter Ellison partner Ross Freeman says that under the Financial Services Reform exposure draft (CLERP 6), ASIC will have powers to ban stock brokers, financial advisers and insurance agents without first conducting a hearing.
Freeman describes the measures as “abhorrent and a denial of natural justice.”
“Under the existing setup a notice is given for a hearing and the reasons to support the placing of the banning order, plus a hearing date with the chance to respond,” he says.
The new situation will reverse the order of this process. An application for review of the banning order can only be made after it is applied.
“The banning order takes effect before any application or hearing and there is no stay while anyone who is banned is applying for a chance to respond,” Freeman says.
“ASIC is obliged to gazette any banning orders and make them public, which can terminate careers and wreck reputations, without prior notice to anyone. By the time a hearing can be held the order has been publicised, the accused has lost their livelihood and chances or ever re-entering the industry are virtually nil.”
Freeman says the provisions were absent from discussion papers circulated before the draft legislation came out and no notification of its inclusion was made to the industry either.
“The direction for this change is unknown as there is no discussion in the paper or explanatory statements which accompany the draft. It is claimed that this is built on part of the old Corporations Law, but sections are missing,” Freeman says.
“The industry deserves an explanation of who decided on this change in policy and why it was introduced so secretively. Unless there are compelling reasons to the contrary, this provision should not be allowed to become law,” Freeman says.
Minter Ellison, representing financial services clients, has made a submission to a joint parliamentary committee seeking changes to the draft bill.
