ASIC admits 'gap' in regulating execs

The corporate regulator has conceded it has not done enough to take action against executives and managers of financial planning businesses, instead focusing on the "frontline" when poor behaviour occurs.

Speaking at ASFA's 'Advice within super' conference yesterday, ASIC deputy chairman Peter Kell said there is a “gap” in the regulator's toolkit relating to its ability to take action against advice business managers, conceding this "hasn't been a major part of [ASIC's] work".

“On several occasions we have had some blunt discussions with [firms] about some of their managers and executives that have been involved in [poor behaviour] but there hasn’t been a lot," Mr Kell said.

Mr Kell listed ASIC's action on non-aligned Western Australian dealer group WealthSure as one example of the regulator taking "direct action" against senior executives, but said ASIC requires the powers to "do it more easily". 

“We have made an argument that it would be much better and much more cost-effective for us to have more direct powers, like they have in the UK, to take banning action and other relevant actions against executives [and] managers,” he said.

Mr Kell pointed out that reforms proposed by the Financial System Inquiry would also allow for the regulator to have greater powers to focus on the executives of financial services companies rather than individuals on the “frontline”.

“[These reforms will give] ASIC greater powers to take action to ban managers and executives of financial advice firms not just the frontline advisers, but the people who are responsible for training, compliance systems, the remuneration and what-not that often drive the culture of the firms,” he said.

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