Australian Securities and Investments Commission (ASIC) has released a revised version of its regulatory guide to outline when and how the financial services industry watchdog may take administrative action.
The revised policy is the first insight into how ASIC will use its broader administrative powers under the Corporations Act (the Act), which were introduced as part of the Future of Financial Advice (FoFA) reforms.
“ASIC’s amended powers will provide greater certainty about our ability to take administrative action against financial services providers who are likely to breach the law,” said ASIC commissioner, John Price, in a statement.
“These changes are intended to make it easier for ASIC to remove unscrupulous operators from the industry, improve overall industry standards and promote broader consumer and investor confidence in financial services.”
The main changes relate to ASIC’s power to suspend or cancel an Australian financial services (AFS) licence or to make an order banning a person from providing a financial service.
Banning orders
The regulator is now able to act on the basis of “anticipated future conduct”, that is where ASIC has reason to believe that the licensee is likely to contravene their AFS obligations or that a person is likely to contravene their legal obligations.
In addition, some clarity has been provided on the sorts of factors ASIC may consider when deciding whether to take administrative action and updated examples of conduct relating to specific periods of banning.
Previously, ASIC could only suspend or cancel an AFS licence if it had reason to believe that the licensee will not comply with a financial services law.
The new test makes it clear that a likelihood of a future breach is sufficient grounds to cancel or suspend an AFS licence.
In short, when it comes to banning orders, the benefit of the doubt is no longer with the licensee.
“ASIC has also been given the power to make a banning order if we have reason to believe that a person is not of good fame or character,” said an ASIC statement.
“The legislation sets out a range of factors ASIC must consider in deciding whether to make a banning order on this ground.
“This change is consistent with existing arrangements under the legislation where a person is disqualified from managing corporations if they are convicted of an offence that involves dishonesty and is punishable by imprisonment for at least three months.”
Guilty of fraud
In related news, a Sydney-based financial adviser has pleaded guilty to falsifying more than 60 insurance applications in order to collect more than $380,000 in ensuing commissions.
Susan Heathwood, of Randwick, pleaded guilty to two counts of dishonest conduct when she faced Downing Centre Local Court this week and has been committed to the District Court for sentence.
Heathwood was alleged to have falsified 65 insurance applications between August 2009 and May 2011, collecting total commissions of $380,897.22 in respect of the policies generated from the false insurance applications.
A total of $326,207.59 was retrieved by the insurance companies in the form of writebacks.
Heathwood made premium payments for a number of the policies to hide the conduct. The total paid in respect of the insurance policies was $49,275.22.
At the time of the conduct she was an authorised representative of GuardianFP and an employee of Jalee Consulting Group, also an authorised representative of GuardianFP. She provided financial advice and arranged life insurance.
The matter was adjourned to July 6, 2012 at the Downing Centre District Court.
Heathwood was granted conditional bail.
