The Australian Securities & Investments Commission (ASIC) may be given new power to reign in financial services or credit licence holders under investigation.
A new position and consultation paper, ASIC’s Directions Power
, released by the ASIC Enforcement Review Taskforce yesterday (8 November) describes three proposals which would give the regulator "directions power" to mandate certain actions of businesses with an ACL or AFSL.
These proposals fill gaps in ASIC’s current set up, which limit the regulator's capacity to act because of time and resource constraints as well as restrictions around how enforceable undertakings currently work.
The taskforce has proposed that ASIC be allowed to give directions to ACL or ASFL holders to prevent further compliance failures during an investigation. This can include compelling a firm to:
- Cease hiring authorised representatives
- Cease accepting new clients
- Conduct a review or audit of an authorised representative’s records
- Work with properly qualified compliance staff
- Halt a business transfer to another licence
- Appoint an ASIC nominated individual to review and report on compliance
- Create a program to assess claims for customer compensation
These additional powers would not replace existing capabilities for enforcement undertakings and would instead complement the outcomes of these negotiations, the taskforce said.
The taskforce has also proposed that ASIC be able to trigger this extra power if an ACL or ASFL holder is seen to contravene financial services or credit laws or has refused or failed to act properly under existing legislation. Additional "public interest considerations" may also be taken into account when considering whether this power should be used.
Finally, the paper suggests ASIC have the power to apply to a court and obtain a legal order for a business to comply with a previously specified direction if that firm has failed to comply initially. Failure to comply may also be considered as a criminal offence for licensee who fail to comply with ASIC’s orders.
The Treasury has asked the public for comments on the consultation paper with interested parties invited to send in their submissions by 20 November.
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