ASIC wants powers beyond its FOFA mandate

The Australian Securities and Investments Commission (ASIC) wants powers beyond those contained in the Future of Financial Advice (FOFA) legislation to deal with misconduct in the financial planning industry.

The regulator has used its submission to the Senate Economic Committee inquiry into consumer protection in the banking, insurance and financial sector to state that while the FOFA reforms were an important step in moving the financial advice industry away from a commission-driven distribution network to a professional services industry, ASIC considered further moves are necessary.

“We consider that there are still some areas of the broader regulatory regime that could be addressed to minimise misconduct and poor quality advice in the future,” the submission said.

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It said additional reforms to enhance ASIC’s powers to control licensee conduct and to give it more flexible enforcement options would assist the regulator to minimise the risk of misconduct by, “for example:

(a) Directing licensees to undertake compliance remediation and compensation actions;

(b) Banning individuals from managing or being involved in a financial services business; and

 (c) Issuing infringement notices for less serious misconduct.

Elsewhere in its submission, ASIC pointed out to the Senate committee the need for it to be able to utilise both competition and product intervention powers.

It said there was a close link between competition considerations and a product intervention power for ASIC and that providing the regulator with a competition mandate and product intervention powers would “enable us to be a more proactive and effective regulator”.

“A competition mandate would allow us to consider and address consumer detriment more broadly,” the submission said. “…we would not need to rely on specific concerns in relation to legislative compliance to consider market failures causing poor conduct and consumer detriment. We would be able to use the proposed product intervention powers to directly address such market failures.”

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FOFA was supposed to weed out the bad advisers, so ASIC says its not working and they need more power?
So we get more compliance, more supervision, even though as an adviser in the past 5 years I have no blemish. What about user pays? These licencees with the EU's out on them let them foot the bill not us! Leave us good advisers alone. You will drive us smaller players out of the industry soon, then you have no one to temper the sales culture that exists in the anyone there that cares?????

Some middle ground enforcement powers for ASIC between Enforceable Undertakings at an AFSL level, and individual licence removal make sense. Also, the ability for ASIC to remove disreputable AFSL managers fills a current hole in the rules, so these changes should be publicly endorsed by advisers, the FPA etc. The bigger deal is ASIC overseeing product - this urgent change must not only be supported but funded. If we'd had these options in place pre GFC, Storm management might have been had more attention for its one size fits all approach to investment advice and double gearing for retirees philosophy, and the multitude of failed structured products might not have seen the light of day.

ASIC took a small sample of recalcitrant advisers as the blueprint and the basis of the LIF legislation as to how all advisers behave in the industry.
ASIC, here's a newsflash, that's not how 99.9% of the industry behaved,... but don't you let facts and logic get in the way of your agenda
It a sad indictment of a flawed process by a bunch of left wing public servants who want to be judge, jury and executioner.
We are so over-regulated now, and these "rocket scientists" want more !!!
By all means let these people have their way.

It's like other terrific decisions made by the "left
wing" side of politics
What are you going to do when you run out of people to blame and who do you expect to foot the bill in the future

ASIC sells idea of our industry paying them for their services, then asks for more powers so it can increase its 'services', so that it can police more aspects which will lead to even higher costs yet again, so no prize for who is going to be left footing the bill yet again...

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