The Financial Services Council (FSC) has told a Parliamentary Committee it believes the Australian Securities and Investments Commission (ASIC) should become more proactive and stop acting after adverse events have occurred in the financial planning industry.
It is arguing that it is ASIC's role to enforce the laws governing financial planners but there have been numerous instances where this has not occurred.
In a submission lodged as part of the Senate Economics Legislation Committee Inquiry into the Scrutiny of Finance Advice, the FSC has also urged a more thorough screening process around the granting of Australian Financial Services Licenses (AFSLs) amounting to a fit and proper test.
The organisation's submission argues that all the legislative and regulatory reform that has been imposed on the financial planning industry, including the Future of Financial Advice (FOFA) changes will be of little use if it is not properly enforced.
"This requires prompt and efficient action by ASIC to investigate and enforce breaches of law," the submission said. "This is critical for the prevention of misleading advice and prevention of breaches of law generally."
"ASIC's role is to enforce the law. There are numerous examples where the law has not been properly enforced," it said.
On the question of adviser licensing, the FSC submission said it advocated that consideration should be given to ensuring that those who apply to be licensed to give financial advice and operate financial advice businesses are of good character, adequately skilled and have adequate financial resources.
"Rather than ASIC acting after the event to intervene, the FSC proposes that ASIC adopt a more stringent approach to new applicants to ensure that only those of good character, who are adequately skilled, have adequate financial resources and can effectively discharge their legal obligations are granted a license to operate," it said.