ASIC shifts focus to product providers
ASIC is ramping up its scrutiny of financial product providers as the corporate regulator looks to recover from a bruising 2014, says a commercial lawyer.
After being publicly dragged over the coals throughout 2014, ASIC is “definitely asking more questions” of the industry, Hall & Wilcox partner Harry New told ifa.
Issuers looking to launch new products are receiving the most scrutiny from the regulator, Mr New said.
“In my recent experience there seems to be more inquiry into products that are being proposed by those applying for a licence,” he said.
The final report of David Murray’s Financial System Inquiry included a recommendation that ASIC be granted product intervention powers, similar to those held by the Financial Services Authority in the UK.
While ASIC does not yet have powers to intervene in products ‘per se’, the regulator is definitely making it harder than it used to be to launch a new product, Mr New said.
“When you apply for a licence you need to describe your proposed business, as well as your strategy and plans,” he said.
“They are asking more questions. It would appear that ASIC is interested in finding out more and using it as a means for gathering information,” Mr New said.
In most cases licences are still being provided for new products, but the process is a longer one and ASIC appears to be consciously drawing it out, he said.
“What they’re also doing more of is conducting risk assessments of particular industries and products,” Mr New said.
“So if you’re applying for a licence for something like foreign exchange trading platforms, that will be a much harder process (and licence) to get than if you were going for a wholesale equities fund, say,” he said.
Derivatives-based products are up for more scrutiny as opposed to less complex products, he added.
ASIC is also drawing out other processes such as the lodgement of breach reports and administrative documents, Mr New said.
“Whereas I think many may have been more perfunctory in the past, ASIC seems to be responding to them in a way that they might not have in the past,” he said.
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