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.
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.”