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Consultation opens on ASIC banning powers

Treasury has launched a consultation into whether ASIC should be given powers to ban senior managers in the financial sector.

The financial services regulator’s Enforcement Review Taskforce — composed of senior members of the Treasury, ASIC, the Attorney‑General’s Department, the Commonwealth Director of Public Prosecutions as well as representatives from industry bodies, consumer groups and academia — released its position paper on Wednesday (6 September) outlining its stance that ASIC should be given powers to ban senior managers from managing financial services businesses.

While ASIC can currently ban a person from providing financial services and remove credit or financial services, it is limited in its ability to prevent banned individuals from managing financial services businesses.

As such, the taskforce is consulting on its proposals for ASIC to ban a person from:

- performing a specific function in a financial services business, including being a senior manager or controller of a financial services business; and/or
- performing any function in a financial services business.

The taskforce also suggested that these powers could be triggered when:

- ASIC has reasons to believe that the person is not a fit and proper person to provide a financial service or financial services, or to perform the role of officer or senior manager in a financial services business; and/or adequately trained, or is not competent, to provide a financial service or financial services, or to perform the role of officer or senior manager in a financial services business;
- A person has been an officer, partner or trustee of a financial services or credit licensee that has been the subject of a report by the Australian Financial Complaints Authority regarding a failure to comply with a determination of that authority; or a corporation that was wound up and a liquidator lodged a report under subsection 533(1) of the Corporations Act about the corporation’s inability to pay its debts; and
- A person has breached his or her duty under sections 180, 181, 182 or 183 of the Corporations Act.

The report reads: “The taskforce believes that these positions would enhance the regime and address the shortcomings that have been raised.... An alternative would have been to adopt in ASIC’s legislation a regime similar to that contained in the BEAR [the Banking Executive Accountability Regime]. This would involve imposing a new set of duties or expectations on individuals within the regulatory purview of ASIC, and enabling ASIC to ban an individual who does not meet those expectations or comply with those duties.

“However, the taskforce — while noting that the APRA regime has important differences, including considerations around prudential risk that may have influenced the decision to adopt the BEAR — considers that ASIC’s powers can be adequately enhanced through the measures outlined.”

All interested parties are being asked to make a submission on the positions outlined to Treasury by 4 October 2017.

Speaking after the release of the report and launch of the consultation, the Minister for Revenue and Financial Services, the Hon Kelly O’Dwyer MP, said: “The government and the community are demanding better from those who occupy senior roles in banks, and the financial services sector generally.

“The Banking Executive Accountability Regime will ensure [that] banks and their senior executives and directors are held accountable when they fail to meet community expectations, including through stronger powers for APRA to remove and disqualify senior executives and directors and through new civil penalties. 


“The taskforce positions would complement the BEAR by enhancing ASIC’s power to hold individuals in the financial services and credit sectors to account for their conduct, in line with the conclusions of the Murray Inquiry.”

The reach of the financial services regulator has been growing exponentially over the past year, with ASIC potentially being given new powers to ban brokers, intercept telecommunications, and cancel or suspend financial services licences if the licensee fails to commence business within six months.

[Related: ASIC and APRA powers should come under scrutiny, says Bowen]

Consultation opens on ASIC banning powers

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Annie Kane

Annie Kane is the editor of The Adviser and Mortgage Business.

As well as writing about the Australian broking industry, the mortgage market, financial regulation, fintechs and the wider lending landscape – Annie is also the host of the Elite Broker and In Focus podcasts and The Adviser Live webcasts. 

Contact Annie at: This email address is being protected from spambots. You need JavaScript enabled to view it.

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