ASIC presents enforcement wishlist to FSI

The introduction of a national exam, a register of all financial planners and the ability to ban those involved in managing financial planning business are key ways to improve financial services according to the corporate regulator. 

In its submission to the Financial Services Inquiry, the Australian Securities and Investments Commission (ASIC) stated that the introduction of a national exam would provide an objective and transparent process to determine whether advisers had met a minimum standard of competency to provide advice on Tier 1 products. 

ASIC stated that a national examination would provide a consistent, industry-wide measure of adviser competencies. It would be linked to an adviser register, which would also record an adviser’s employment history and any cases of misconduct. 

The regulator stated that at present it did not track 'employee representatives’ who provide financial advice and had to rely on Australian financial service licensees to ensure they remained compliant and competent to provide advice. 

As a result ASIC claimed it was difficult to locate poor advisers who moved within the sector, and a more comprehensive register would offer greater consumer protection. 

However ASIC also stated it would be able to remove poor advisers from the sector via a mandated reference checking system when they attempted to move to a new licensee. 

It claimed “there is a real and significant problem with 'bad apples’ in the financial advice industry” who change employment when identified and are able to gain new employment by the absence of a proper reference check being conducted by a new licensee or supplied by the former licensee. 

ASIC also repeated it calls for the ability to ban those involved in the management of financial advice businesses involved with breaches. It claimed it was “critical for ASIC to have sufficient powers to remove persons from operating” within financial services if it was warranted. 

“While ASIC has powers to cancel an AFS licence or credit licence, or ban a person from providing financial services or credit services, a missing element is a power to prevent a person from having a role in managing a financial services business or credit business. 

“ASIC recommends amending the law to provide ASIC with the power to ban a person from managing a financial services business or credit business.”