Govt panel backs tougher ASIC banning powers
The extension of the Bank Executive Accountability Regime (BEAR) to other finance sector executives was actively canvassed by the Government panel tasked with reviewing the Australian Securities and Investments Commission’s (ASIC’s) power to ban senior officials in the finance sector.
The panel’s report, which has been opened for industry discussion, freely acknowledged that consideration had been given to extending the provisions of the BEAR to other financial services executives but the panel had ultimately stopped short of doing so.
The panel has nominated two key options for strengthening ASIC’s banning powers, but noted that ‘an alternative would have been to adopt in ASIC’s legislation a regime similar to that contained in the BEAR”.
“This would involve imposing a new set of duties or expectations on individuals within the regulatory purview of ASIC, and enabling ASIC to ban an individual who does not meet those expectations or comply with those duties,” it said.
“However, it said that while understanding the reasoning behind the implementation of the BEAR regime, it considered that ASIC’s powers could be adequately enhanced through other measures.
Prime amongst those measures is removing some of the limitations which have inhibited ASIC’s use of its banning powers therefore expanding the scope of banning orders so that the regulator has the power to ban a person from “performing a specific function in a financial services business, including being a senior manager, or a control of a financial services business; and/ or performing any function in a financial services business”.
The Taskforce has considered this issue and believes it could be adequately addressed by expanding the scope of the banning order, so that ASIC should have a power to ban a person from: 5.1. performing a specific function in a financial services business, including being a senior manager, or a controller of a financial services business; and/or 5.2. performing any function in a financial services business”.
The panel has also suggested changes to prevent executives and managers escaping ASIC’s net and noted that this can be addressed by broadening the circumstances in which ASIC may make a banning order against individuals to expressly cover directors, officers and senior managers of financial services companies.
The panel cited instances where such people were not deemed to be “fit and proper” and where a person had more than once been an officer, partner or trustee of a company that had been the subject of an adverse report by the Australian Financial Complaints Authority (AFCA).
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