ASIC chairman Greg Medcraft has welcomed a suggestion that financial advisers who engage in “egregious” behaviour be suspended from the industry with immediate effect.
Mr Medcraft fronted up to a Senate Economics References Committee public hearing in Sydney yesterday as part of the committee's inquiry into the performance of ASIC.
Nationals Senator John Williams asked the panel of ASIC commissioners what needs to be changed – either in regulation or legislation – to allow the regulator to make a phone call and suspend a planner “on the spot”.
The question came about in the context of ASIC's failure to ban former Commonwealth Financial Planning adviser Ricky Gillespie until November 2012 – despite receiving documents about Gillespie from CBA years earlier.
ASIC senior executive leader Greg Kirk laid out the formal legal processes that are required before an official banning order can be handed down.
“Under the current legal settings, we've got to establish proof, have a hearing and give them a right to to be heard,” said Mr Kirk.
To allow immediate suspensions would involve ASIC in being given powers that “over-rode people's rights to hear the case against them and have it tested before there was a legal outcome that took away their right to earn a living”, he added.
But Mr Medcraft was open to the idea of “reversing the onus” onto the financial planner by immediately suspending them as a “protection mechanism” in cases where there is damage being done to individuals.
“You would then have a process where in fact they have to defend why that suspension shouldn't become a permanent banning,” he said.
Similar powers already exist in law in the form of 'stop orders', Mr Medcraft said.
“We issue stop orders on prospectuses, [for example] ... The principle is already in the law in relation to other aspects in Corporations Law,” he said.
“I don't think it's unreasonable that there be that ability to suspend where there was evidence there that it was so egregious.
“Especially if the company itself had suspended the [planner] – at least you stop the planner from actually going and getting a job with another firm. I think it's a good idea,” Mr Medcraft said.
SUBSCRIBE TO THE IFA DAILY BULLETIN
- 19 Nov 2018ClearView launches dealer services offerBy Adrian Flores
- 19 Nov 2018Lonsec introduces super research to advisersBy Sarah Simpkins
- 19 Nov 2018FASEA releases standards blueprintBy Eliot Hastie
- 16 Nov 2018Government sets $51m to pursue misconductBy Eliot Hastie
- 16 Nov 2018The financial advisers most people don’t read aboutBy James Mitchell
- 16 Nov 2018Clients expect advisers to understand their situationBy Eliot Hastie
- view all