Changes to Financial Adviser Disciplinary Systems


New functions and powers for ASIC’s Financial Services and Credit Panel have come into effect from 1 January 2022.

From 1 January, the FSCP now has the power to direct financial advisers to undertake specified training, counselling or supervision and to report certain matters to ASIC. The panel may also:

  • Suspend or cancel a financial adviser’s registration
  • Issue infringement notices in specified circumstances
  • Recommend that ASIC commence civil penalty proceedings
  • Enter into enforceable undertakings with financial advisers

A statement released by ASIC just before Christmas notes these new powers for the FSCP stem from recommendation 2.10 in the final report of the Financial Services Royal Commission:

Recommendation 2.10, taken from the Final Report of the Royal Commission into Misconduct in the Banking, Superannuation and Financial Services Industry

By way of background, the regulator notes the Financial Sector Reform (Hayne Royal Commission Response—Better Advice) Act 2021 implements the Federal Government’s response to the Financial Services Royal Commission Final Report Recommendation 2.10: New financial adviser disciplinary system (see: New Disciplinary System for Advisers One Step Closer).

It says a key reform under the Act is to give the Financial Services and Credit Panel its own statutory functions and powers. The reforms in the Act commenced on 1 January 2022.

ASIC adds that from 1 January 2022, it must convene an FSCP in circumstances prescribed by the Financial Sector Reform Amendment (Hayne Royal Commission Response—Better Advice) Regulations 2021, made on 20 December 2021:

…ASIC must convene an FSCP where it reasonably believes that a financial adviser is not a fit and proper person to provide advice

“For instance, ASIC must convene an FSCP where it reasonably believes that a financial adviser is not a fit and proper person to provide advice or a financial adviser becomes an insolvent under administration and ASIC is aware of this. In addition, ASIC must issue a warning/reprimand in relation to certain misconduct.”

ASIC says it will proceed to issue a warning/reprimand or make a referral to an FSCP “…only where it has formed the reasonable belief after carrying out its usual triaging, investigatory work and referral processes.

“This means that not all concerns about the conduct of financial advisers that come to ASIC’s attention will result in ASIC issuing a warning/reprimand or a referral to an FSCP.”

The commission will consult on guidance regarding the operation of the FSCP early this year and will also release guidance about how it will exercise its new power to issue warnings/reprimands in early 2022.