The Stockbrokers and Financial Advisers Association (SAFAA) has criticised the Government’s Single Disciplinary Body (SDB) paper for not specifying whether the corporate regulator must convene a panel in certain circumstances or retains the discretion to do so.
The second round of submissions for the Better Advice Bill closed last week and Judith Fox, SAFAA chief executive, said the association welcomed the paper’s recommendation about winnowing out non-material matters but there was still ambiguity over when a panel could be called.
“We had raised that at the beginning – as did every association – as it was going to clog up the disciplinary system,” Fox said.
“We were pleased to see that element of materiality had come into it, but even in the policy paper there’s still some ambiguity whether ASIC still retain discretion to convene a panel in certain circumstances.
“In the original bill it was going to convene a panel for a contravention of a financial services law and in our first submission we pointed out that could be a financial services guide been sent out three days late.
“Why would you convene a panel for that? It’s a waste of everybody’s time so that’s what meant by an element of materiality.”
Fox said it was good there was more certainty that it was not going to be convened for minor matters but there were still some questions around the ambiguity for when a panel could be convened.
“It’s a step forward that there’s recognition that convening the panel for minor matters doesn’t help anybody, but there’s still things to be sorted out there,” Fox said.
First time offences
In the submission, SAFAA said it agreed the following first-time offences be included on the Australian Securities and Investments Commission’s (ASIC’s) Financial Adviser Register (FAR):
- A written direction by the panel to undertake specified training;
- A written direction by the panel to received specified counselling;
- A written direction by the panel to received specified supervision;
- A written direction by the panel to report specified matters to ASIC; and
- A written registration suspension or prohibition order by the panel.
However, it said the written direction sanctions should be automatically removed from the FAR after a period of five years.
It also wants the implementation date of the SDB to be delayed until 1 July, 2022, to give the industry adequate time to prepare for the scheme.
Fox said it was fine to include first time offenses on the FAR but unfair to include them indefinitely.
“If you’ve been directed to undertake training, counselling or supervision – if those things take place why does the sanction stay on your record forever?” Fox said.
“The point is, they asked you to do something and you did it, so we don’t think it should be on the record forever.”
Code of ethics
Fox said a panel should not be convened for a breach of Standard 3 or Standard 6 of the code of ethics yet.
“Standard 3 is a highly contested standard that conflicts with the law,” Fox said.
“For brokers, Standard 6 is highly problematic because FASEA [Financial Adviser Standards and Ethics Authority] had a financial planning lens on everything and Standard 6 is about taking into account long-term circumstances of the client.
“If the client rings you up and they just want to buy BHP shares – they don’t want you to go into a whole big thing about their broader long-term circumstances – they just want to buy the shares at a good price.”