ASIC’s proposed peer-review panel for banning orders is intended to ensure the regulator takes into account current industry practices in a process that is deliberately conducted with “as little technicality and formality, and as expeditiously, as possible”.
Yesterday, ASIC released a consultation paper proposing the establishment of a Financial Services Panel, which will be comprised of industry participants and decide whether the regulator should ban individuals in significant, complex or novel cases.
In the paper, ASIC said it must “conduct administrative hearings with as little technicality and formality, and as expeditiously, as possible", as set out in the ASIC Act and National Credit Act.
“However, we must bear in mind the need for a proper consideration of the issues in question and the legislative requirements of the corporations legislation (other than the excluded provisions),” ASIC said.
The Financial Services Panel may assist in improving regulatory outcomes by ensuring that ASIC’s administrative decisions are based on a thorough understanding of current industry practice and standards.
The panel would also bring a broader range of experiences and perspectives into the decision-making process and increase awareness of the decisions being made by ASIC and the standards it sets.
Further, the panel could potentially increase the significance of decisions – both for the individual who is subject to the potential banning and for other market participants – when these decisions are made with peer involvement, ASIC said.
However, there are a few risks with using a peer-based model, ASIC said, including decisions that are inconsistent and not aligned with ASIC’s policy.
There could also be community concerns that the industry is judging itself as well as increased costs due to “more people being involved”, ASIC said.
“To potentially mitigate these concerns, we propose that the panel would include an ASIC staff member who is specialised and trained in making these types of decisions and only make decisions on a subset – rather than all – of ASIC’s administrative decisions.”
In March, ifa published an in-depth feature questioning whether the regulator’s banning processes are fair.
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