The chairman of the parliamentary joint committee overseeing ASIC has suggested the regulator may hold small licensees to a different standard than large corporations.
In a series of questions to ASIC representatives, Coalition senator David Fawcett of the joint committee on corporations and financial services said the regulator should be consistent in its enforcement actions, regardless of an organisation’s size.
He pointed to a case where a small brokerage had its licence cancelled for failing to provide its services honestly and efficiently.
“That sounds remarkably like some of the larger things we have been talking about and I would be interested to know, if you applied that threshold to a small licence holder, has ASIC ever considered applying that to a larger licence holder?” Mr Fawcett asked the regulator’s representatives.
A spokesperson from ASIC responded that their enforcement actions often depended on available evidence.
Mr Fawcett then suggested consistent enforcement would improve the industry’s image and put large organisations on notice.
“I think in terms of confidence in the market for consumers and so there's consistency, I would invite you to consider how you apply those thresholds regardless of the size of the organisation,” he said.
“That sends a powerful message to the board level, as well as the management level, of every single licence holder that they have an obligation not just to pay lip service to putting that culture and internal compliance regime in place, but they could lose their business model if they don't do it.
“If it's good enough for the small guy in town, it's something we should be applying to the system.”
In response, ASIC senior executive leader, strategy Greg Kirk said the regulator did apply the same rules to all licensees but that larger organisations were more difficult to prosecute due to their scale.
“In practice, if a licensee only has one person in it, dishonesty is at a 100 per cent rate and it's much easier to convince a court to sustain a licence removal in that situation, compared to a situation where a place has 500 advisers and ten dishonest people working under it,” he said.
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