Speaking at the ASIC Regulatory Update in Melbourne this week, ASIC deputy chair Peter Kell noted that Treasurer Scott Morrison and Minister for Revenue and Financial Services Kelly O’Dwyer have jointly announced increased regulatory powers and obligations.
These increased powers include “significantly stronger and clearer” rules on licensees’ breach reporting obligations, a stronger ability for ASIC to take action against senior staff within a business, a ‘directions power’ that ASIC can use to force licensees to take particular remedial actions, and stronger penalties for licensees.
“In the financial year that has just ended, ASIC’s enforcement outcomes included 21 criminal convictions, 27 civil proceedings completed, and 27 court enforceable undertakings. We obtained almost $350 million for consumers in compensation,” Mr Kell said.
“We banned 127 financial advisers or credit providers, and disqualified 49 directors. In other words, enforcement is very much a focus for ASIC, but what has also been clear is that ASIC’s powers and penalties have needed an upgrade.”
However, Mr Kell added that new obligations for product manufacturers will also help to rebuild trust in the industry.
“There are several other areas of regulatory reform which will play an important part in addressing the ‘trust deficit’, and improving standards in the financial services sector,” he said.
“These are financial product design and distribution obligations and the introduction of product intervention powers for ASIC.”
According to Mr Kell, these proposed obligations will “bring accountability to issuers and distributors of products” by making sure all products are designed with the needs of customers in mind.
“There will no longer be the opportunity for ‘product manufacturers’ to shift blame to ‘product sellers’ and vice versa when something goes wrong, which has been an unfortunate feature of the financial services industry for too long,” Mr Kell said.
“The reform signals that responsibility for good consumer outcomes runs right across the supply chain.”
Government has also looked into the possibility of granting ASIC intervention powers to act where it believes a product is “identified as creating a risk of significant consumer detriment”, Mr Kell said.
“There will no longer be the opportunity for ‘product manufacturers’ to shift blame to ‘product sellers’ and vice versa when something goes wrong, which has been an unfortunate feature of the financial services industry for too long,”
Another unfortunate feature of the financial services industry could be argued that the regulator ASIC has been asleep at the wheel. Surely the Royal Commission evidence is enough to show that the regulator is out of touch.
To use a traffic metaphor, the regulator sets the speed limits, closes roads & continuously funnels traffic along it’s preferred route, however then blames the car & drivers for causing accidents.
Take some responsibility please. This is embarrassing for us all.
Its already hard enough to get a product to market and its only the bank aligned products that ever get up.
The simple reality is that the adviser sit’s across the table from the client and quite frankly the client take’s the advisers advice.
Advisers shouldn’t be trying to hide behind rating agencies, dealer groups or product manufactures. Take responsibility for the advice we give.
So ill Just Rock up to Vanguards office (or any fund manager) and ask them to show me all their trading activity, meet their management, discuss their trading techniques, etc etc?
Actions speak louder than words and there is certainly a [u]back log[/u] of management negligence to be investigated. When action starts along this line, trust will be returned for all involved.
Thanks Peter Johnston and the AIOFP as the only adviser led industry body that has been fighting the institutions, product manufacturers and ASIC on this problem for at least 10 years.
Wait and see if it works properly but definitely a change in direction from ASIC that usually puts every single piece of blame always on the Adviser and no one else.
I wasn’t aware of their work in this space – good on them! I always thought it was laughable that ASIC signed off on all of the MIS that failed, the ATO issued them with product rulings, then hung the planners out to dry. No different from a crooked police officer planting evidence.