The Australian Securities and Investments Commission (ASIC) will be given the scope to be more proactive in intervening against financial services licensees where it believes consumer detriment will occur under new measures being considered by the Federal Government.
The financial services industry has been given just two weeks to respond to the recommendations of the ASIC Enforcement Review taskforce within Treasury which has recommended that ASIC be given an enforcement power which would give it options to deal with licensees more quickly and beyond recourse to enforceable undertakings.
The Minister for Revenue and Financial Services, Kelly O’Dwyer said the taskforce recommendations were consistent with the report of the Financial System Inquiry (FSI) which recommended that ASIC have more capacity to impose conditions requiring licensees to address concerns about serious or systemic non-compliance with licence obligations.
She said the Taskforce recommendations within the positions paper proposed an ASIC directions power triggered where a contravention of financial services or credit law has, is, or will occur, and in other limited circumstances. Under the power, ASIC could give a direction to a licensee relating to the conduct of its business, including ceasing to accept new clients or requiring an audit of records.
“The proposed directions power would allow ASIC to take steps to protect consumers by preventing harm before the damage is done,” O’Dwyer said.
The positions paper points to the time it takes ASIC to proceed against licensees either through the courts or via enforceable undertakings and states: “The taskforce considers that, to the extent practicable, ASIC should be able to require compliance with AFS or credit licence obligations in real time, and that the regulator should be given powers to direct licensees to take or refrain from taking actions where appropriate for this purpose”.
