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.
Recommended for you
The Reserve Bank of Australia (RBA) has lowered rates to a level not seen since mid-2023.
Financial Services Minister Stephen Jones has shared further details on the second tranche of the Delivering Better Financial Outcomes reforms including modernising best interests duty and reforming Statements of Advice.
The Federal Court has found a company director guilty of operating unregistered managed investment schemes and carrying on a financial services business without holding an AFSL.
The Governance Institute has said ASIC’s governance arrangements are no longer “fit for purpose” in a time when financial markets are quickly innovating and cyber crime becomes a threat.
