With the Single Disciplinary Body (SDB) in operation but yet to convene a panel, Michelle Huckel, Stockbrokers and Investment Advisers Association (SIAA) policy manager, has explained its proposed processes and procedures.
Falling under the Better Advice Act which came into effect on 1 January 2022, the new SDB expanded the role of the existing Financial Services and Credit Panel (FSCP) and created new penalties and sanctions for misbehaving financial advisers.
Speaking at a SIAA webinar, Huckel said the panel must comprise a minimum of at least two industry participants, which the Australian Securities and Investments Commission (ASIC) must select from a list of eligible persons appointed by the minister.
The chair of the panel would always be an ASIC staff member with both a deliberative and casting vote.
A convened panel would have the power to take action against individual financial advisers, not licensees while disciplinary action against licensees and authorised representatives that were not financial advisers would continue to be administered by ASIC.
Huckel divided panel convening circumstances into two parts, when panels must be convened and when panels might be convened.
The circumstances which required peer review by an FSCP and where ASIC must convene a panel were:
- Where ASIC was aware that a financial adviser had become insolvent under administration or had been convicted of fraud;
- Where ASIC reasonable believed that the person was not a fit and proper person to provide financial advice;
- Where the adviser failed to meet the education and training requirements (exam, education qualifications, PY requirements), failed to approve a Statement of Advice prepared by a provisional financial adviser, or provided personal financial advice while unregistered;
- Where ASIC reasonably believed that the adviser had breached a financial services law or had been involved in another person’s breach of a financial services law, and ASIC formed a reasonable belief that the breach was serious;
- Where the adviser had at least twice been linked to a refusal or failure to give effect to a determination made by the Australian Financial Complaints Authority (AFCA) and ASIC reasonably believed that the consequences of those refusals or failures was serious; and
- ASIC had not exercised and did not propose to exercise any of its powers under the Corporations Act legislation, ie by imposing a banning order or accepting an enforceable undertaking.
Huckel said ASIC had a lot of discretion when it may convene a panel, which allowed it to convene a panel at any time even if the convening circumstances were not present.
“In our submission to the consultation we have argued that there has to be an overarching principle of fairness applied in its exercise to ensure that it's not arbitrary. And we've argued that the Single Disciplinary Body currently seen to be acting punitively against advisors or using the panel as a way of pursuing standards of conduct that exceed the law.”