Licensees at risk under proposed code changes

The Federal Government has sent a clear message to the financial services industry that it wants to tighten up on codes of conduct, including imposing them if industry sectors do not move quickly enough, and making code breaches tantamount to breaches of the law.

The Government’s tougher approach has been outlined by the Treasurer, Josh Frydenberg at the same time as releasing an industry consultation paper around industry codes of conduct which openly asks, “when should the Government prescribe a mandatory financial services industry code?”

Frydenberg said the consultation process was part of the Government’s direct response to the recommendations of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.

The consultation paper also canvasses giving the Australian Securities and Investments Commission (ASIC) similar enforcement powers to those held by the Australian Competition and Consumer Commission (ACCC).

The discussion paper points out that Commissioner Kenneth Hayne noted that a breach of an enforceable code provision should constitute a breach of the law and that similar provision existed within the Competition and Consumer Act and carried civil penalties.

Dealing with enforcement and remedies, it said that because a breach of the code provisions would  be a ‘breach of the law’, “it also follows that it may be a breach of a licensing condition, where there is a general licensing obligation to comply with applicable laws, which can be enforced by the appropriate regulator”

“Because this is a breach of the law, it may also be open to ASIC to take a range of other enforcement action for a breach,” it said.




Author

Comments

Comments

Surely this is all a waste of time, effort and money.
The govt and opposition are both of the view financial services is something best managed by govt or union controlled entities. The govt has now entered this space with www.lifechecks.gov.au.
The offer under this programme is "free personalised financial advice"
One sector has to be regulated out of existence while another is able to operate unconstrained.

How about we implement the same on political parties and wan ker politicians so they're all ethical and accountable under law?

I recently witnessed the impact that can occur when an adviser makes an honest error when sending out a communication. He was personally devastated.and is working hard to remediate the situation. If this involved ASIC I can't imagine what might happen to his business, his family and his life, not to mention his clients who value his advice, if these bureaucrats, with literally no skin, investment or risk, in any game are given even more power or ability to crush someone. No matter how many rules, conditions or laws are imposed there will always be crooks. Sadly the 99.9% have to pay the price and government paid bullies are only too keen to dish it out to good guys who make a small mistake in a very complex industry. Where no loss or damage has occurred what is the point?

Why would you be a licensee? The more rules, complexity and narrowly focused 'guidance' that ASIC issues via it's Reg Guides - the harder it becomes to comply. When applied to advice, parts of Reg Guide 246 conflict with Reg Guide 175... But ASIC will NEVER give you a definitive opinion when you seek formal guidance from them. Why? Two reasons - firstly they often don't know - and secondly - they want to keep cards up their sleeves to come at you afterwards when their opinion shifts.

There you go again "Shooting the wrong dog" - how many bank executives and their legal advice have been sanctioned for wrong doings? As Shorten said, steal from customers - get paid a bonus, steal from a bank - go to jail.

Bob, the narrative you describe has been the norm for a long time in industry governance. Professor Jurgen Basedow of Max Planck Institute wrote: "Once a bureaucracy is in existence it will treat the matter in a bureaucratic way: making investigations, complaining of limited resources, disclosing information that triggers further scandals etc. I do not know of any significant area of private business that is not increasingly the focus of public law and attention." Jurisprudence Professor Emilios Christodoulidis wrote: " With its forever renewed gesture of inclusion, governance installs itself as horizon of every possible instantiation of democracy and justice and every possible critique. It is this usurpation of language, and the collapse of critique into meaning-depriving inclusion, which comes to sustain and buttress the lie that is democratic governance."

The House of Lords resolved that Sharia Law was not Law, but a code of conduct. The Treasurer would be well advised to discuss with Federal Court Judges, who may not give decisions on codes of conduct. Financial Institutions previously ignored ASIC Regulatory Guidelines because it did not have the force of Law, especially RG244 including Clients' Best Interests Duties, where such breaches were found by the Hayne Royal Commission.

Add new comment