Taskforce Calls for Boost to ASIC Penalty Regime

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Financial advisers could be hit with fines of $126,000 for failing to provide a Statement of Advice (SoA) under new recommendations being put forward by a Federal Government taskforce, which has recommended the penalties available to ASIC be substantially increased.

The ASIC Enforcement Review Taskforce stated in its recently released position paper – Strengthening Penalties for Corporate and Financial Sector Misconductthat “…concerns have emerged in a number of forums that the penalties in the legislation administered by ASIC may not be effective in that they do not reflect community perceptions as to the seriousness of engaging in certain forms of misconduct”.

The paper covers all areas currently under the oversight of ASIC, including financial advice, and states that under the relevant sections of the Corporations Act, licensees are obligated to provide a Financial Services Guide (FSG) and SoA to consumers.

Failure to do so when required carries a fine of 100 Penalty Units (PU) for an individual and 500 PU’s for a body corporate.

“…concerns have emerged…that the penalties in the legislation administered by ASIC may not be effective…”

Figures available through the Taskforce’s webpage indicate that an individual PU is $210 and thus current maximum fines are equal to $21,000 for individuals and $105,000 for corporate entities.

In its position paper the Taskforce has recommended these fines be increased to 600 PU’s ($126,000) for individuals and 6000 PU’s ($1.26 million) for a body corporate.

Fines for knowingly providing a defective FSG or SoA would also increase from 200 PU’s ($42,000) to 4,500 PU’s ($945,000) for an individual and from a 1,000 PU’s ($210,000) to 45,000 PU’s ($9.45 million) for a corporate entity.

The paper stated the reason for the high level of this second group of fines was “…these disclosure requirements are fundamental obligations designed to protect consumers”. It added that knowingly providing defective documents to consumers was comparable with providing false or misleading statements to financial markets.

The Taskforce will continue to accept submissions on the paper until 17 November 2017.



5 COMMENTS

  1. Why not make it a $1m? Idiots. If you are that concerned about people receiving SOA’s, why do you allow the same products to be sold through on-line or TV groups like I Select or Choosi without them? Simply because it’s easier to attack advisers again to justify your extra payments for being on a task force!

  2. Companies like Adani, the giant Indian mining consortium allow massive pollution spills to destroy our environment and they get a few thousand dollars fine, so it makes total sense if a client does not get a document ( SOA ) that they cannot understand anyway, due to confusing Legal wording that the adviser had nothing to do with the complex maze that is the current world we live in and yet must still present this confusing document to confused people, should be fined $126,000 on a recommendation they probably will only be paid a pittance for anyway.

    Can we introduce fines for public servants who do not work to a professional standard, or whose recommendations cause damage, rather than produce benefits and better outcomes.

  3. Well said Jeremy. Australian Bank KNOWINGLY launders money for terrorist organisations – pittiful fine – no one loses job, no charges pressed. Same Bank pressures doctors to change insurance claims decision – no action taken. An adviser doesn’t produce a risk SOA – debilitating career and family destroying fine or banned from the industry – Life destroyed.

    The writing is on the wall. ASIC want to remove access to financial advice for all but the top 1% of Australia and anyone who says different is compromised by personal agendas. What did they think reducing commissions, whilst increasing the compliance burden and education standards was going to do?

    Why would anyone want to give risk advice (unless its a HNW client who has high premiums or is happy to pay a $5k set up fee and ongoing fee) when it can all be done through General Advice with way less time WASTED on paperwork and compliance and less chance of getting fined or sued as No Advice was given. Plus you get paid the same for less than half the work and you could do every Risk Sale in 1 appointment.

  4. Advisers have criticised the performance of ASIC – and quite rightly so – as shown in another article in this weeks Risk Info. So now we read a recommendation that would give them increased powers. What a joke!

  5. Why would anyone spend 10 seconds putting a submission together for these consumer right imposters?

    They’re not interested at all in anything that’s submitted as they no doubt have the end already in mind. Destroy this industry.

    I’m on the verge of leaving this industry now after nearly 10 years for one reason – ASIC.

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