ASIC flexes its muscles at independent advisers

The regulator’s Queensland commissioner has told financial advisers what they can expect from a freshly minted, significantly more powerful corporate watchdog.

During the course of the financial services royal commission – the interim report of which was heavily critical of ASIC’s reluctance to litigate – the federal government announced $70.1 million of new funding initiatives for the regulator.

Speaking at the annual AIOFP Conference on the Gold Coast on Wednesday, ASIC regional commissioner for Queensland John Weaver told delegates that the regulator will be ramping up its enforcement plans, increasing penalties “tenfold” and using all of its powers to clamp down on misconduct in financial services.

“There is a government and community expectation that they want us to speed up what we are doing and to do more,” Mr Weaver said.


“It’s about increasing our capacity to pursue actions for serious misconduct through the greater use of external expertise and resources.”

ASIC chair James Shipton told a parliamentary committee earlier in the year that the regulator requires far more resources if the government wants to see increased legal action against corporate Australia.

ASIC’s $70 million taxpayer-funded war chest will finance this.

Mr Weaver revealed that $26.2 million of the purse will go towards an enforcements “special account”, which receives around $30 million in government funding per year, mostly to fund large court cases such as the Westpac BBSW case.

Over $9 million will go towards regulation of the superannuation sector and $8 million will be spent on “close and continuing monitoring” – a new supervisory and surveillance agenda that will initially apply to the major banks.

Mr Weaver said ASIC also wants to make the AFSL licensing regime “more difficult”.

“If you look at the UK, you have to positively demonstrate that you meet a lot of criteria; whereas here the onus is different,” he said.

“I think ASIC’s view is that it is easier to keep people out of industry who shouldn’t be in industry than it is to kick people out of industry. Therefore the bar for licensing should be set at an appropriate level and the regulator should seek to find out whether someone should have a licence or not, and have an appropriate power to refuse that licence.”

ASIC has also expressed a strong desire to have its own version of APRA’s Banking Executive Accountability Regime (BEAR), which currently only applies to ADIs, superannuation funds and insurance companies, which fall under the remit of the prudential regulator.

“That takes out huge parts of the profession and we think individuals in those senior manager roles should have accountability,” Mr Weaver said.

He acknowledged a view held by many financial advisers that it is often “the people at the bottom” that are the ones ASIC focuses on, rather than the major players.

Legislative reform is also in the works, including significantly heavier penalties for misconduct.

“There are tenfold increases for some penalties,” he said.

“There will also be a disgorgement power, which is about taking the profit out of wrongdoing."

ASIC flexes its muscles at independent advisers
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