Minister for Revenue and Financial Services Kelly O’Dwyer has welcomed proposals from an ASIC taskforce to give the corporate regulator more scope in its penalties regime to both act as a better deterrent and to better reflect the nature of some misconduct within the industry.
Speaking to ifa yesterday, a spokesperson for the minister’s office confirmed the proposals, made by the ASIC Enforcement Review Taskforce, follow on from the Financial System Inquiry’s recommendation that penalties be “substantially increased”.
The proposals are outlined in the taskforce’s latest position paper, which identified three key problems with the current penalties regime.
These problems are that many penalties are too small to act as credible deterrents, that the variety of available penalties for some kinds of misconduct is too limited, and that some penalties are inconsistent with equivalent state and Commonwealth provisions.
Subsequently, the taskforce recommended that the penalty regime be modified to provide ASIC with more variety and tougher penalties for a range of misconduct issues, both criminal and non-criminal.
These include changes to penalties for breach of disclosure requirements, which would see the penalty for failing to provide an SOA increase from a 100 penalty-unit fine and/or a maximum two-year prison term, to a 600 penalty-unit fine and/or a maximum prison term of five years.
Ms O’Dwyer said in a release that increased penalties will “foster greater industry compliance and improve public confidence in the financial system” and ensure ASIC can effectively regulate the sector.
“The taskforce process will help to ensure that ASIC has the right tools to combat corporate and financial sector misconduct and to protect consumers,” Ms O’Dwyer said.
The ASIC Enforcement Review Taskforce was created in October last year to review the current enforcement regime, and is comprised of representatives of ASIC, the Attorney-General’s Department, the office of the Commonwealth Director of Public Prosecutions, academic and legal experts, and is led by a panel chaired by Treasury.
Many of the recommendations made by the ASIC Enforcement Review Taskforce reflect proposals initially made by the corporate regulator in March 2014 in its Report 387: Penalties for corporate wrongdoing paper.
Interested parties can submit responses to the position paper until 17 November 2017.
Time to go into real estate where I can say whatever I want and get as many “secret” commissions as I can!
5 years prison for not providing a SOA. Really? Cmon. what planet are these politicians from? You don’t even get that for killing someone these days.
ironic isn’t it? You can assault someone and get a lighter sentence than this. Someone mentioned this is good to capture all the property spruikers and SMSF deals being done but they often are not Licensed advisers in the first place and are unregulated. Also if Accountants are still setting up SMSF’s without being Authorised how is that being policed? Who from the CPA or CA is checking this advice? Answer is no-one… they self regulate…what a shambles its all become…
Exactly, world has gone mad. A step father recently walked out of court for killing his young step son with a ‘manslaughter’ charge and no jail time for time spent in custody, but somehow planners are more evil and a bigger threat to society than that? Sure we all should be doing SoA’s no doubt, but in perspective this is just effing ludicrous.
Makes one rethink their career. I know, others will say “if you haven’t done anything wrong you’ve got nothing to worry about”. That’s not the point however. It’s the total disrespect for the industry that seems to be deepening. I can only foresee more regulations, more penalties…and less productivity going forward. You can forget about the traditional superannuation and insurance advice, that will soon be dead for us. It won’t be cost effective and far too risky to provide. We need to rethink our advice propositions and relevance.
Totally agree. Saw a bloke the other day get 3 years for killing someone while negligent driving. He was doing a burnout and lost control and took out some poor innocent lady. Sentencing laws in this country are a sick joke. Maybe get ASIC to start regulating burnouts.
In theory this could be very good… Assuming these powers are used to penalise accountants and property spruikers providing unlicensed advice… I think we all know it wont be though.
Ive spent the whole week trying to fix an Accountant’s advice on small business CGT super contributions being made before an election…
God help us when there’s a market crash and every clients want to move into guaranteed products and we have to produce a 100 page SOA to say why it’s a good idea…
Your market crash is less than 10 months away. Could be as soon 4 months. Count on it.
Think of the number of Industry Fund Staff who will be so guilty! Let’s hope all the proceeds of fines go to subsidise the Fees levied by ASIC on decent advisers. If so, our ASIC Contribution Fees will be almost zero!!!
Experience shows that the longer the statement of advice is, the crappier and more costly is the content.
This is not consistent with an efficient and market lead industry. A system wont work as our system currently does not when the compliance regime ‘assumes’ all participants are corrupt and unethical AND a punitive system which then punishes the wrong doers. When advice can be expertly delivered in a 2 page document there is no need for a 40-50 or longer page SOA which neither provides real value or information to a client nor protects the Adviser. It is an outdated relic of the beginnings of this industry and we need to innovate and move past this method of proposing the strategies to clients. Once again lawyers with no real understanding of the industry are ruining it with overt bureaucracy and layers of red tape. Was it not ASIC that stated in their legislation that SOA’s should be no longer than 5-6 pages long? If they are so good at regulating this industry then why aren’t they??
Totally agree , lets have a discussion with the new ASIc chief ??
ASIC say this but when they come out and audit advisers & AFSLs they ping you for not having all the crap in the Fact Find, comparisons, alternate strategies & products, plus repeating the insurance & investment PDSs spelt out and regurgitated in the SOA. It really is a joke.