Decoding determinations: Understanding the FSCP decisions
As advisers seek greater insights into FSCP determinations, what are the various options considered by the panel and can a decision be appealed?
The FSCP is a pool of industry participants, appointed by the responsible minister, that ASIC draws upon when forming individual sitting panels. It operates separately from, but alongside, ASIC’s existing administrative decision-making processes.
A sitting panel will be convened by ASIC to consider certain suspected misconduct by, or circumstances relating to, a financial adviser such as if it reasonably believes a financial adviser is not a fit and proper person to provide advice or a financial adviser becomes insolvent under administration and ASIC is aware of this.
Each sitting panel comprises an ASIC staff member and at least two members from the FSCP.
The five possible actions that the panel can take are:
- The power to direct relevant providers to undertake specified training, counselling, supervision or report certain matters to ASIC.
- The power to suspend or prohibit a relevant provider’s registration.
- The power to issue infringement notices in specified circumstances.
- The power to recommend that ASIC commence civil penalty proceedings.
- The power to accept enforceable undertakings from relevant providers.
- The panel is required to share its reasoning with the relevant provider in writing.
For less serious misconduct, ASIC is not required to convene a sitting panel but must issue a warning or reprimand if it does not propose to convene a sitting panel or exercise other enforcement powers. This may result in no action being taken, which has occurred in six instances.
Over the last 12 months, there have been four written directions, three reprimands, one warning, and one written order.
Generally, a warning will warn a relevant provider against continuing the conduct or circumstances that led to the warning, whereas a reprimand will admonish the relevant provider in relation to the conduct or circumstances that have already ceased.
In both cases, a copy must be provided to their licensee, plus a statement of reasons behind the decision, and one can only be issued for activity that occurred on or after 1 January 2022.
Appealing a decision
If a relevant provider wants more information about the determination, they can discuss the action with the chair of the sitting panel or the senior manager of the administrative law team.
They may also apply to the Administrative Review Tribunal (ART) for a decision on whether the statement contains adequate information.
The ART is also able to confirm the panel’s decision, vary the decision and set aside the decision, depending on the circumstances of the matter. For example, an infringement notice or enforceable undertaking is ineligible for an ART review.
If a relevant provider wishes to apply to the ART, they must do so in writing within 28 days of the day they are told of the decision and pay an application fee of $1,121.
Finally, they can apply to ASIC for a variation or revocation of a decision if it directs to undertake specified training, supervision, counselling or reporting, or to make an order suspending or cancelling registration.
“ASIC will determine whether to convene another sitting panel to consider your application. Various matters may be relevant to ASIC’s decision whether to convene a sitting panel, such as whether there has been a change in the circumstances that led to a sitting panel giving the direction or order to the financial adviser,” it stated.
Recent determinations
Recent FSCP determinations included a written direction after an adviser gave incorrect advice regarding non-concessional contributions and a two-year registration cancellation for an NSW adviser who displayed a “level of incompetence” in providing advice to his clients.
In the case of the NSW adviser, the individual was named, but this is uncommon practice with this only occurring when it is necessary to display the outcome on the Financial Advisers Register.
The latest determination, enacted in mid-April, saw no action being taken after a relevant provider failed to meet their CPD requirements.
“No action was warranted because of the extenuating circumstances that led to the non-compliance,” the panel stated.
Earlier this year, ASIC warned advisers that it has convened multiple sitting panels regarding AFSL breach reports which have identified poor superannuation advice from financial advisers.
The panels, held between July and October 2024, followed multiple instances of breach reports submitted by AFSLs, and that it was concerned the financial advisers had failed to comply with the best interest duty and give appropriate advice to their clients.
ASIC said it continues to refer financial advisers to the FSCP to address and highlight the misconduct, its impact on consumers, and the importance of financial advisers complying with their advice and conduct obligations while always acting in a manner that promotes the value of diligence.
AUTHOR
Laura Dew
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