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ASIC considers ‘tougher’ record-keeping penalties

ASIC is contemplating hitting financial services firms with harsher penalties if they fall behind on proper record-keeping, with one commissioner saying more responsibility should fall on the licensee.

During a Senate Economics Legislation Committee hearing yesterday, Senator David Bushby noted an industry issue of shortfalls in record-keeping, using the missing files in CBA's client compensation scheme as an example.

At the moment, ASIC's response to inadequate documentation would be imposing licence conditions. However, ASIC deputy chair Peter Kell believes "a stronger approach" is required.

"We have seen a little too much of the sort of behaviour in the past where licensees have said, 'Oh well, it's the adviser. If they've got it, they've got it. If not, well that's life'," he said.

"Frankly, Senator, if we don't see improvements in this area, we may well be coming back to this committee in the future arguing for stronger penalties or tougher rules around this."

ASIC senior executive Louise Macaulay added that the regulator is currently seeking the public's opinion on strengthening the requirement for licensees to have access to records, which she said has been an ongoing issue in client remediation programs.

"We have made our views on this very clear to licensees. We are consulting on strengthening those obligations. We have consulted on this in the past and we received pushback from the industry," she said.

"When this consultation period ends at the end of this month, we'll have a look at those submissions but we will look at them very much from the lens of the kind of issues that I described to you today."


ASIC announced in December 2015 that it was seeking feedback on proposed guidelines for AFSLs on how to run review and remediation programs. The paper also suggested amending the laws around general record-keeping requirements in order to place "beyond doubt" that licensees must have access to records for a period of time.

The move to push this reform came after ASIC identified that, in some cases, client remediation would be better facilitated with clearer record-keeping.

ifa reported last week that CBA was ramping up its efforts to track down some formerly-aligned advisers and their missing paperwork, which continues to be an obstacle in the bank's client compensation scheme.

ASIC considers ‘tougher’ record-keeping penalties
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