The Federal Government will increase the powers of ASIC allowing it to ban people from holding any role in financial services as well as being able to revoke or cancel financial services licences where the holder is not considered not to be ‘fit or proper’.
The expanded powers were announced by the Government as part of its response to recommendations made by the ASIC Enforcement Review Taskforce in late 2017 which called for a boost of the regulator’s power and a heavier regime of fines and penalties (see: Taskforce Calls for Boost to ASIC Penalty Regime).
Announcing the response, the Minister for Revenue and Financial Services, Kelly O’Dwyer said the Government would implement 30 of 50 recommendations made by the Taskforce, which reviewed the adequacy of ASIC’s enforcement regime.
The remaining recommendations, which relate to self-reporting of breaches, industry codes and ASIC’s directions powers, will be considered alongside the final report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry.
“This is not the product of events of just the last few days…”
As part of the recommendations to be implemented ASIC will be given an expanded ability to ban individuals from performing any role in a financial services company where they are found to be unfit, improper, or incompetent, and will also be able to refuse, revoke or cancel financial services licences where the licensee is not fit or proper.
The Government will also implement a range of stronger criminal and civil penalties for corporate misconduct, which O’Dwyer claimed would ensure they were a credible deterrent to unacceptable misconduct.
The maximum level of penalties for serious criminal offences under the Corporations Act would be
- For individuals: 10 years’ imprisonment and/or the larger of $945,000 OR three times the benefits
- For corporations: the larger of $9.45 million or three times benefits OR 10% of annual turnover.
The maximum civil penalty amounts that can be imposed by courts would be either:
- the greater of $1.05 million (for individuals, from $200,000) and $10.5 million (for corporations, from $1 million)
- three times the benefit gained or loss avoided
- 10% of the annual turnover (for corporations).
Federal Treasurer, Scott Morrison, who announced the changes with O’Dwyer, said they were unrelated to issues stemming from the Royal Commission and the process of examining whether they were necessary began in October 2016.
“This is something that has had a very long gestation period. It came out of the Financial Systems Inquiry that was initiated when we first came into government in 2013,” Morrison said.
“We have been working on this over a very long period of time, and working sequentially through the issues that need to be addressed,” he said, adding “This is not the product of events of just the last few days, obviously, because it started several years ago.”
The changes have received support from the FSC which stated that criminal behaviour in financial services should be met with the full force of the law.
“It is entirely appropriate that penalties for civil and criminal misconduct are as strong as possible,” FSC Chief Executive, Sally Loane said.
“Consumers must have confidence that the individuals and organisations they entrust with their savings will act in the right way. Both effective enforcement of the law as well as severe punishments for wrongdoing are central to promoting better trust and confidence.”
How many other FP’s have had their clients lose all their life savings because their licensees recommended product list that included:
Tax Advantaged Investments – All paid higher than standard up front incentives to the licensee
Direct Property-Pretext:”IT WOULD PROVIDE THE INCOME REQUIRED.” until it didn’t”
Property Trusts- “IT WOULD PROVIDE THE INCOME REQUIRED”.-.” until it didn’t”
Was it just that the licensee were paid more upfront commissions
How many Investments were established and administered by legitimate professional EXPERIENCED property developers .- NONE of those that failed. Any most failed with massive losses. Are the parties concerned in goal, served time ,had a criminal conviction, OR even lost their regulatory licenses ?NO they just keep doing the same con tricks with the same licensees.
Don’t ya just love the way politicians jump on the bandwagon to impose penalties and jail threats when they themselves are so incompetent! Yet nothing happens to them!
They still walk away with lifetime pensions and benefits paid for by taxpayers!
Seems the law is an ass and made for those who impose it and those who suffer it!
All consumers suffer it!
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